Justin McLeod is the 30-year-old founder of Hinge, a dating app that connects you with friends of your Facebook friends. The Tinder rival, which started in Washington, D.C. and has since expanded to 20 U.S. cities, has made 8 million matches so far and raised $8.6 million from the likes of 500 Startups and Great Oaks Venture Capital..
After finishing business school in 2011, McLeod spurned an offer from McKinsey to build his company. But before Hinge reached a critical mass of users, it nearly went under. Last year, McLeod decided it was time to risk rebuilding the desktop app as a mobile app --and to spend the last of the company's cash on a launch party. The unusual move paid off. The party brought Hinge a record number of users and its investors provided enough additional capital to get to the next round of funding. Below, read the story in McLeod's own words.
In February 2011, I was at Harvard Business School and was set to go work at McKinsey consulting when I graduated. I knew I wanted to do something entrepreneurial eventually, and I had a software development background from high school and college. Harvard was throwing what they called the "Last Chance Dance" before we all graduated, where people could get a last chance to go for someone they liked. I built a Facebook app for the class to list their secret crushes and if there was a match, we'd let them know. This got the wheels turning for me, especially as someone who wouldn't want to join OKCupid or Match.com. I felt like there was something there resembling how you meet people in real life--through your friends.
I figured we could make that process of meeting your friends' friends a lot easier. I started working on that and decided to decline the McKinsey route, which everyone felt was crazy at the time. I started hacking away at Hinge.
The Last Chance Dance ended up not happening, but we had already set up the desktop app on Facebook, which allowed you to scroll through your friends and click to submit the ones you liked. If someone else listed you and you listed them, you'd get a notification. I continued to build it out, adding a discovery concept to the app so you can find people who you've never met before. I decided to pursue this full time after graduation. That summer I had a prototype, raised money from friends and family, and started working on it in Washington, D.C.
We were working at Fortify, which is an accelerator in D.C., and they provided an initial investment. Along with investments from a few angels, we raised around $1 million. I hired my first employee in January 2012, but it was still just a small circle of friends and family messing around with it. In May of that year, I hired my second employee and we launched a new version to a wider audience at Harvard, which flopped, and D.C., where it did not do very well either. Not that many people were using it, we weren't hitting any significant milestones, and it wasn't going anywhere.
That Thanksgiving, I flew to my parents' house in Colorado to be with my family. The day after, I was having a panic attack realizing all our work was going to waste. We were making marginal improvements to the app, but we'd run out of money before I figured out how to make it take off. I thought about what was wrong with the app and asked myself what I would do now if I started from scratch: I would make it for mobile and I would've made it way simpler. And I would have focused on what humans actually care about, like basic information, how you're connected to that person, and attractiveness level.
I called my partners and said we needed to take the rest of the money we have, which was $32,000, and rebuild the app before it's all gone. We canceled everything and me and my two engineers rented a condo in Florida to get away for a couple of weeks, and we rebuilt the entire thing between Thanksgiving and Christmas. We holed up and worked--waking up early, working until 2 a.m. every night. We redesigned everything from the ground up and decided we needed to throw a giant launch party. While we were down in Florida, our marketing officer was up in D.C. planning the party, reaching out to vendors.
We weren't exactly eating ramen, but I had stopped taking a salary and the rest of the guys took reduced salaries. It was a shaky moment, considering one of the engineers had just left a stable job to join us.
Once we were done, we submitted it to Apple's App Store in January and went back to D.C. The first version got rejected because of a tiny bug. We had to move out of the Fortify space, so we reached out to the accelerator 1776 and we were tucked away in a little back office with no windows. We fixed the app and resubmitted it again.
I knew if we wanted something like this to be successful we needed a large, core group of people who are all connected on Facebook and had power as influencers. I had a lot of friends in D.C. and started spreading the word about our party to be held on February 7, 2013. We hired Viceroy, a big-name DJ, set up an open bar, and we asked the accelerator if we could use their co-working space, which was under construction on the top floor of an office building. It was basically a wide-open space with nothing but concrete walls and floors.
During this whole time, we still hadn't heard from the App Store. [There was] radio silence, and the party was fast approaching. We were thinking holy cow, we're having this huge party and we won't even have an app to launch.
On February 6, the day before the party, we still didn't have the app in the App Store. We hadn't heard anything, so we started to build a mobile web version of Hinge to make sure we had something to promote. But somehow, at 8 o'clock that night, we found out Hinge was accepted.
The party was a success--we had at least 3,000 people throughout the night. It was jam-packed. We had an art installation, my friend who's a photographer was taking pictures, and a lot of other friends helped us. We had 20 bartenders and an open bar, insurance, and cleaning crews, so all of that added up to $25,000.
By the next day, Hinge made more matches than we did in the course of its whole history combined. Before this party, we had made a puny number, like a few hundred with 50 people using it every day, but the party helped it catch on.
At that time, the idea of online dating and dating apps hadn't separated. No one would want to tell their friends they were using an online dating service, so although the party was to help us get a critical mass of users, an even bigger aspect of it was to get the coolest people in town using the app, seeing each other signing up, and using it.
It was a big bet--creating an online dating service surrounding your friends and friends of friends banked on users being comfortable enough to use it and tell their friends about it. The reduction of stigma is because of the ease and simplicity involved. If you're willing to join a service, pay money, create a profile, and answer all these questions, that means you're not having a great dating life in the real world. But Hinge and similar apps allow you to tap a button and you're in. The idea is, why not take an opportunity to meet great people without any money or pain involved?
Before the party, we were close to over. We couldn't show our investors anything was improving, but two days after the party we had record number of signups and our investors gave us a lifeline. That bump in capital gave us enough traction to take a trip to New York and let investors hear about us. Eventually, all of this resulted in our Series A. But that round was user-driven. As more people started to use Hinge, they told their friends. Soon, our users were emailing us and asking how they could get involved. One power user contacted us about investing and he got all of his friends to invest. Other investors got involved along with the users and we raised a total of $4 million.
Looking back to that Thanksgiving in 2012, it was terrifying to realize we were running out of money. We could've crumpled up and that would've been the end. The worst thing for an entrepreneur is not knowing where to go. Mostly, along the way, I have always had a next step. Things may not have been great before, but that day after Thanksgiving I really was at a point where I didn't know what to do next. Luckily, it led to one of the greatest breakthroughs we had.
As an entrepreneur running a startup, you're a risk manager. You don't want to take wild, insane risks. I don't want people to take away from this that they should take $25,000 and blow it on some crazy, Hail Mary pass. In retrospect, it looked like a Hail Mary pass, but in reality we had a reason to throw a launch party and it was a calculated move. We knew how many users we could get by inviting 3,000 people, we knew how many users we could sign up, what match rate we could expect, and knew how much money we had left to burn.
We cut it pretty close, but the moral of our story isn't to take crazy risks, but take managed and thoughtful risks. We worked hard to make the party happen and to figure out that's what we needed. It was an educated guess as to what would make us successful, and it worked.