StartUp Podcast: Dating Ring Of Fire (Season 2, #9)
June 26, 2015 12:24 PM - Subscribe

Under pressure, the Dating Ring founders make a big decision.

With money running out, revenue flat, and no funding on the horizon, Emma and Lauren have to make a tough decision. Do they give up and fold the company, or become a "lifestyle business"? They discuss their fears, feelings of failure, how they'll tell their investors (i.e. their parents), and what it means to be a lifestyle business.
posted by radioamy (15 comments total) 1 user marked this as a favorite
Sort of feels like a ripoff. I mean, it's easy to say this because I didn't write it anywhere, but I have been thinking for several episodes "I bet they would be way happier if they weren't trying to kill themselves with "Grow! Grow! Grow!" but then this wouldn't be StartUp so I guess I understand why they aren't dong that."

But now we learn they're just going to be a lifestyle company. I'm happy for them to some degree, but it also feels like something of a wasted effort? But not totally because the story of not quite making it is still worth hearing.

Now that I write about it I realize I'm feeling pretty conflicted. So I'm not sure.
posted by Tevin at 5:12 PM on June 26, 2015

Nah, and for two reasons:

1) It's patently important to publicize stories of people who don't become superstars. I mean, the vast, vast majority of anyone following in these sorts of footsteps don't become multibillionaires. There's this cultural lie of omission -- or maybe it's confirmation bias or something along those lines-- in so many fields. Obviously for this company the fundamentals were very possibly just never there in the first place, but it's also worth considering that every item on a how-I-became-huge powerpoint presentation is pretty much guaranteed to be self-delusion, which would be clear to everyone if you could only see the thousands of other people/companies who followed similar steps but didn't end up successful enough to speak at the conference.

2) Lifestyle business is the natural order of things, and thinking otherwise is due only to the ideological warping effect of venture capital. This very website, for example, is as great as it is precisely because it has steadfastly remained a lifestyle business. Megagrowth, both in the push for that growth, and as a result of obtaining that growth, seems to pretty much always lead to awfulness. (Remember 11 years ago when Google still looked like a friendly exception?)

2a) Gimlet Media is totally a lifestyle business, too, no? Why would anyone who cares about craft want to bother becoming primarily a technology platform? At first being such a platform (i.e., taking rent from others who would seek to publish on it) would take the pressure off of the radio producing itself being profitable. But eventually the VC investors come knocking, and there's the push to go public, and then the part of the business you care about becomes a "content creation" line item that's soaking up too many resources compared to the percentage of profit it's bringing in. Wouldn't that be inevitable in the supergrowth, non-lifestyle business scenario?

Ok, that's enough ranting. Sorry!
posted by nobody at 6:25 PM on June 26, 2015 [3 favorites]

I don't understand feeling ripped off. They tried to be a billion dollar start-up, and they failed. They might succeed at being a small company though. I'd feel more ripped off if they followed a company and didn't tell us about their failure.
posted by skewed at 6:43 PM on June 26, 2015

Yeah I don't understand the feeling either, which is why I said I felt conflicted!
posted by Tevin at 7:21 PM on June 26, 2015 [2 favorites]

I think we were all sorta hoping for a classic "success story" arc. But realistically, we had all talked before about how this business is really not scalable. A "lifestyle" business really seems like *such* a better fit!

I also agree that it's important to publicize businesses that don't reinforce the Silicon Valley mythology.

However, Gimlet isn't a lifestyle business. They're working crazy startup hours, and their listenership is growing like crazy. They got *Ford* to sponsor this show. More importantly, they raised quite a bit of capital at the beginning. We heard Chris Sacca talk about how he isn't in the business of supporting lifestyle businesses because there is no ROI for him. The only thing that they're a bit measured about is how many new shows they take on.
posted by radioamy at 10:19 PM on June 26, 2015

I will say that I appreciated having only one host. It made this show so much cleaner. I like Alex Blumberg a lot, but his voice just served to compete with Lisa Chow's during previous episodes. (It was doubly confusing when they added Lisa Pollock in the mix.)
posted by radioamy at 10:22 PM on June 26, 2015 [2 favorites]

Does this mean that they're changing the service they're offering again?

One of the messages from previous episodes -- from interviews with other dating sites, and from their own experience -- was that they have a critical-mass problem: too few users means there's not a big enough pool to match well from, and that makes users unhappy, and they leave.

That doesn't seem to me a problem that goes away by redefining themselves as a lifestyle business.
posted by We had a deal, Kyle at 7:27 AM on June 27, 2015 [1 favorite]

Gimlet isn't a lifestyle business.

One of the S1 episodes was pretty much about that -- and was the source of the Chris Sacca quote used in this episode. It did feel then like Alex had quite a lot of internal conflict on that question; that maybe he would have been quite happy doing it as a lifestyle business, but had to put on the "THIS IS GOING TO BE HUGE" show to convince investors.
posted by We had a deal, Kyle at 7:30 AM on June 27, 2015

Gimlet is a considerably different type of company than Dating Ring. For dating Ring to grow they need to continually get new users, as, if they are successful, they'll be losing membership as they find successful matches. It also differs, because they were not able to find a 'magic algorithm' to match people, each new member makes the new company do new work.

I.e. There is a direct correlation between the number of users Dating Ring has and the need the company has to increase its capability to do work. Costs increase as the user base increases.

Gimlet doesn't have the correlation. Once a podcast is made each new listener to the podcast incurs no/or marginal costs (bandwidth and webhosting). Costs don't significantly increase as the user base increases.

Thus Gimlet is posed to take advantage of explosive growth. Any day now they could produce a breakout podcast that sweeps the world by storm and their advertizing revenues would equally skyrocket.

So Gimlet at least has the possibility of suddenly being a media company worth billions of dollars practically overnight, whereas it's hard to see anyway Dating Ring does. The potential for this explosive growth is what seems to separate a "start up" from a "lifestyle" company; not the effort put into the business by the people who run it. So I would qualify Gimlet as a "start up" for investor purposes, not a "lifestyle company".

I'm convinced that a "start up" company like Dating Ring will, someday, exist. I just don't think that the founders of Dating Ring are the people to do it. It will probably require someone with a deep knowledge of how to grow/build nueronets (or whatever replaces them) and someone who has the money and time to gather the raw data that largely determines whether people really enjoy dates. Okcupid is ok (and just ok, hence the joke of their name) about helping people search, but they don't have much, if any data, about how its users self-presentation on the site matches to objective criteria and how those both relate to peoples' dating experiences. And that's the type of data that's going to be needed to create a nueronet that automatically matches people.

I think this will happen in my lifetime or shortly after (as long as we don't get eaten by machines singularity style), and I'd like to see it. Dating is a pain.

What would be interesting is if the neuronet gets tuned, Las Vegas gambling addict style, to provide people with dates that they love, but which would only likely lead to short term or no relationship, so the company can continue to get users to pay as they feel "The company is sooooo close to getting me what I want. I'll keep paying just a little longer..."
posted by bswinburn at 9:11 AM on June 27, 2015 [1 favorite]

Hmm, We had a deal Kyle, you make a good point. They do need a critical mass of users Maybe the idea is to just grow at a natural pace and focus on the business, rather than go for the "hypergrowth" that investors demand? Maybe they'll touch on that in the next episode.
posted by radioamy at 9:47 AM on June 27, 2015

Really interesting episode. I'm still not sure quite what to make of the company.

First of all, the world would be a better place if more businesses (especially the large ones) decided to become lifestyle businesses. Paying your employees a living wage, producing a useful product or service, and breaking even are pretty awesome goals. If it weren't for the distortions caused by external investors, I suspect a lot more companies would chug along quite happily in this model. Pointing out that most startups fail, and that "failure" applies only to a very specific context and set of expectations is useful.

Second, a startup which is both run by women and focused on the details of nitty-gritty human interactions is really neat. It puts the ham-handed "pre-defined discrete categories in a table" approach most social sites take into perspective. And the founders seem like genuinely thoughtful and kind people who I want to see succeed.

At the same time, the company as it exists seems utterly impossible to scale to a large number of users. It also hasn't really demonstrated that their outcomes are better than either their competitors or random chance.

Having a co-founder hand pick dates based on one-on-one interviews isn't the Uber of dating sites; it's the clinical social work of dating sites. Or, perhaps, the real estate agency of dating sites, except without month-salary-scale commissions and the benefit of a huge international financial machine driving the industry.

What's more, there's very little discussion of automating even the easily automated parts of the business. In terms of technology, everything they've described could be done with fax machines and a file cabinet. The only thing new about their business is the number of very mature and robust direct competitors. That's not a bad thing. Both bus driving and medical doctoring fall into the same category, and people have fulfilling careers in those fields. But, growth by hiring smart high-payed people and having them repeatedly do things manually is a really weird pitch to make to tech industry investors. Given the cultural context required and the demographics of their users, it seems likely they can't even hire really cheap people to do the manual stuff for them.

Which is to say, I guess, that I would be astonished to see these people succeeded, but I sure do hope they fail well.
posted by eotvos at 12:19 PM on June 27, 2015 [1 favorite]

My impression from past episodes was that the only part of their business that was actually working pretty well and generating more revenue than it cost was their "premium" service which was much more like a traditional matchmaking service. It sounds to me like they've basically decided to just go with that part of the business. Charge less people more money, rather than try to have a whole lot of customers.

I haven't found most of this season nearly as interesting as the first, but in the last two episodes it's taken a turn that makes it much more compelling. It's gone from being about trying to fit into the Silicon Valley image of what a startup is supposed to be into what it takes to make a regular business work.

Also, before considering shifting to a "lifestyle business" a failure, let's not forget about our favourite lifestyle business.
posted by Emanuel at 2:29 PM on June 27, 2015

I think it'll be really hard to judge this season until the last episode airs. I do like the narrative forming in recent episodes around the judgmental attitude regarding 'lifestyle businesses' and how those may actually be fine after all. There are also some human threads in this season that I've really enjoyed, particularly Emma's comments about her sister and how that's been causing her to reflect on her own life. I'm actually a little surprised they didn't draw that back into this episode--deciding to be a little more humane about how you go about your own life seems like it would really fit with the decision discussed here.
posted by Kosh at 4:11 PM on June 27, 2015

I was fairly befuddled by this episode. It's not like you suddenly push a button and your "lifestyle" business is burning less cash. Were they spending tons of money on trying to grow the business and cutting this off will allow them to stop bleeding cash?

Blegh. In general I've found this season to be only very sporadically insightful. It seems like too often they paint something in very broad strokes and then fail to fill in the details that allow you to understand what's happening.

I do agree that having one narrator was a huge improvement.
posted by selfnoise at 12:08 PM on June 29, 2015

I don't understand why people hate the idea of a lifestyle business. Oh no! A company that makes you enough money to live on, where you work a normal number of hours a week, where you can cover expenses and hire a bunch of people -- typically that IS the dream, not selling your company in 2 years to GooAppBook for 23 billion dollars.

I know the name of the podcast is Startup, but it can include other new businesses, not JUST startups -- which are after all typically risky and will end in failure a lot.

Though again I understand why they didn't do this, I really wonder what kind of pay the founders were receiving, because, well, I know a lot of small business founders, and if they succeed it's because during lean times they do not take a salary and have other jobs -- it seems out of fashion currently, but I saw the financial statements for one company where all the founders are getting 6 figures and they aren't close to covering expenses monthly.
posted by jeather at 6:43 PM on July 20, 2015

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