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Grindr as a Lifestyle Business

Joel Simkhai founded the location-aware hookup app five years ago. Things haven't gone as planned. Bizarrely enough, it's smooth sailing now.
Joel Simkhai, the founder and CEO of Grindr.

Joel Simkhai, the founder and CEO of Grindr.

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It's been a whole five years on this planet that gay men have been able to use their cell phone to find other gay men nearby, and--by selecting a photo, most typically a torso shot, on their phone of a nearby person--attempt to meet up. And hook up.

I met with Joel Simkhai, five years after he created Grindr, the app that started the app-based dating movement. Today he's 37 years old, and I asked him to look back to the early days, back when Grindr was just a seed of an idea, and back when Simkhai was still living in Manhattan (he's since moved to Los Angeles), running a small magazine-sales operation out of his apartment.

The Daily Grind

"The idea is so obvious to me: In my own life as a gay man, I'm just constantly trying to figure out who else is gay. I probably ask myself that question about someone else 30 or 40 times a day," he said.

It sure seems obvious now that Grindr indeed solves that problem for Simkhai, and for more than 5 million active monthly users of the two apps--Grindr and Grindr Xtra, a $10- or $12-a-month subscription service--in 192 countries. Users of the apps send each other more than 3 million photos a day using the app's messaging feature.

Seventy-five percent of the company's revenues come from those subscriptions to Grindr Xtra, which allows users to see more other nearby users, and see fewer ads, and 25 percent comes from advertising (as sold by Grindr's own staff, and also from mobile-ad networks such as Millenial Media). Simkhai doesn't spill actual revenue figures, but says the company is profitable with 30 employees, and has never taken a cent of outside investment.

Perhaps looming over the now-stable company is one big fat fact: Grindr, one of the forefathers of mobile dating, did not create Tinder. Tinder, on the surface, is almost ridiculously similar to Grindr: It's another LA-based dating app company with about 30 employees. Its utility also hinges on being location-aware. Only, it's a lot more popular: 10 million matches are made on Tinder every day, and tens of thousands of people download the app for the first time daily. The differences between them, aside that Tinder targets straight daters, are small--but the tiny tweaks became key to Tinder's success. (Tinder is owned by IAC, which also owns Match.com, because it was incubated in a research lab there.)

Grindr tried to appeal to a broader audience of heterosexual and lesbian users two years ago, by launching an app it called Blendr. Blendr, also, did not achieve the widespread use that Tinder has found, and after Grindr tried to beef up the company to support it, Simkhai says he eventually decided to let Blendr go. Today, dating-app company Badoo runs and supports Blendr.

When I sat down with Simkhai at an Austin hotel bar during the South by Southwest Interactive festival, right around the time Grindr turned five years old, he explained the subtle differences between Grindr's original Blendr app and Tinder, and his goals for the future of Grindr, which look a lot different--perhaps refreshingly so--from that of your typical California startup.

What was your motivation for starting a location-aware dating app? The idea other people nearby could roughly see your location was brand new, and a little startling, at the time.
In my 20s I tried some more traditional dating sites, and it's in general a really poor experience. Mostly because location is really not part of it. You could of course search within, say, a mile, but a mile in Manhattan is literally tens of thousands of people. So, Steve Jobs announces the second-generation iPhone June 2008, and I knew that was exactly what I needed. Now there would be GPS in the phone, the app store, and the ability for a developer to write software.

Did you know how to write software?
No, I went into this frantic race to find a developer. And there weren't really many iPhone developers out there yet. But there were some developers who worked on apps for jailbroken phones. I found this guy who had worked on a mapping app, and who had used for it an external GPS unit that he hacked into his phone. He did a hardware hack and a software hack--how cool is that?

How did you pitch Grindr to him?
I wrote to him with just a little bit of the idea, saying I wanted to build an app that would show you people around you. He said, "I love it; I love it." Then I said, "and, uhhhhh, it's only for gay guys." He's like, "perfect. It's a perfect market, because if it works for gay guys, that's a great proof of concept."

How did you grow? Did you take venture capital?
We are all self-funded. We never raised any money. We just have the subscription model, and Grindr Free is ad-supported. There are pop-ups, so we have advertisers that are bars or clubs if you're in them or nearby. Grindr Xtra is the subscription service, and that's a separate app on the iPhone. Ads are broken up into some third-party networks and we have our own sales team.

Was not taking investment a strategy from the beginning?
There was no strategy. There were always challenges; not having money is a big challenge. One of the things I don't understand about entrepreneurs: I don't like other people telling me what to do. I like to chart my own course, I like to control my own destiny, I like to solve problems, I like challenges, and I like the idea that if I'm going to risk something, I'm going to get the reward. Those are the reasons I like being an entrepreneur. I met with a bunch of VCs, and floated the idea [of raising funding], but I never did it. I think I was just looking for validation--for approval. But why would you give so much up just for validation? You can't pay your bills with validation. My top piece of advice to entrepreneurs is do everything you can not to raise capital.

What kinds of advertisers show up on the app?
Local is very popular, so bars, clubs, doctors, Botox is popular. Teeth whitening, a lot of cosmetic stuff does well for us. And personal trainers. In Los Angeles we have a gay accountant. I don't really know why you'd need a gay accountant in particular, but hey, if you're trying to attract a gay audience, it obviously works.

How many users do you have now?
Over 3 million monthly uniques, and 1 million daily users.

How do you find new users? I think I've seen Badoo ads, but never a Grindr ad.
We've done a little Facebook advertising, but we've never bought a billboard, never ran an ad in a magazine. It's all really word of mouth and press, especially in the early days. Pop culture references, too: I just did a cameo on Watch What Happens Live with Andy Cohen. We launched in March, and in June 2009, Stephen Fry, a British character actor, went on a top BBC show, and showed off his apps. One was Grindr. For about a minute and a half they are just talking about Grindr. We doubled our traffic within minutes.

And talking to the press about what some might see as a controversial idea always felt natural to you?
Yeah! I love talking about Grindr. Talking about my business comes very natural to me.

Let's talk about Tinder. The app has had great growth and really strong user numbers. What is it doing differently than Blendr did?
I think they figured out some things that I didn't figure out. One is the mutual match--obviously huge. Girls don't want to be harassed by guys. It's a more controlled harass. That's very smart. The fact that all the info comes from Facebook is very good and very interesting.

So, small technical details make a big difference.
When we launched Blendr, we, just like for Grindr, allowed users to send photos in chat. We thought, what's the big deal? But when somebody sends you an unsolicited dick shot, that's not cool. And the first time a girl sees that, she's going to delete the app. Tinder has certain components that make it very comfortable for women.

Are you worried about Tinder as competition?
I think it's not an app for gay guys. It's not that immediate affirmation. I think it's too slow.

And you are still single?
Yes! Sorry, [looking up from screen] this is what happens when I open Grindr in meetings. I get distracted.

Are you still getting new users?
Yeah, it's still growing. As people get more iPhones globally, markets like Brazil, are growing well for us now. Three years ago, no one had an iPhone in Brazil. In China we're seeing growth. Anytime Apple signs a deal with another carrier, I high five.

Are you hindered in growth, though?
Sure. It depends what you are trying to achieve. Am I going to be a $15 billion company? No. Will I be a company that has a great market, a great user base, a nice business, I think so. Are you going to hear about Grindr being sold for $100 billion dollars? No.

Would you consider an exit strategy?
I'd take $19 billion. But no, I don't think I'd go public--all the regulations. But if the right deal came by at the right time, with the right partner, maybe. We actually got an acquisition offer the day we launched. It was a ridiculously small amount of money. I'm lucky--if the offer was a little bit better, I would have taken it, and I wouldn't have the business right now.

Correct me if I'm wrong, but you're not trying to scale greatly, you enjoy the company being pretty small, 30 people, and don't want to IPO. This is starting to sound like a lifestyle business.
Yeah, after five years--yeah. And it's OK. I'm working a sane number of hours, and love it.

 

 

 

IMAGE: Reno Tahoe via Flickr
Last updated: Apr 7, 2014

CHRISTINE LAGORIO-CHAFKIN | Staff Writer | Senior Writer

Christine Lagorio-Chafkin is a writer, editor, and reporter whose work has appeared in The New York Times, The Washington Post, The San Francisco Chronicle, The Village Voice, and The Believer, among other publications. She is a senior writer at Inc.




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