Tinder

Giovanni De Domenico GRENOBLE ECOLE DE MANAGEMENT- MSC. INNOVATION, STRATEGY AND ENTREPRENEURSHIP – ID 142182 It's how people meet  Abstract The paper is dedicated to the analysis and examination of Tinder from innovation management point of view. The perspective adopted will define how the topics encountered affect the chosen innovation. First, the essay will introduce the context of the virtual dating before Tinder. Then, the paper is going to classify Tinder among the types of innovation explored and observe the degree of expansion and diffusion in both economic and social contexts. The study will investigate the source of the innovation, its origins and the role of the users, how it spreads, the weight of the technological lockouts and time of entry. Then there will be an analysis of Tinder’s business model and its intellectual property rights. Introduction The technology has had huge impact on every aspect of our life, above all how we interact with other people. People began to use the WWW to find a partner since 1995 http://blog.badonlinedates.com/date-stories-jens-blog/2012/10/infographic-the-evolution-of-online-dating.html . Today there are both millions of websites and couples made up online. The diffusion of smartphones has brought the ubiquity of connection to 1.75 billion devices owners starting the migration from online dating to mobile dating. After the first dating service on a mobile phone Proxidating was using the Bluetooth technology to connect mobile devices. and the expansion of smartphones in 2007, the outbreak of the mobile dating apps took place. Their portability and proximity features turned people’s daily life in a social activity. Dating is one of the aspect of our life the most suitable for becoming a social activity. In fact, in 2013 7% of smartphone users had used a dating app http://www.neomobile-blog.com/online-dating-evolution-infographic-neomobile/ . One of the most innovative and lively dating app is Tinder http://www.gotinder.com/about that, of course, takes advantage of proximity and portability features that smartphones can provide to the dating apps. A market valued at 1.4 billion in 2013 http://www.neomobile-blog.com/online-dating-evolution-infographic-neomobile/ . Tinder is influencing and changing the entire process of dating, involving the means, the tools, the processes, the feelings, the contexts and of course the behaviours. The curiosity for this app built in only 3 weeks and how it would face the challenge to shift to a profitable business model arouse me deciding my choice. Definition types Tinder is a product innovation, which according to the Oslo Manual definition is a good or a service new or significantly improved by technical specifications, component and materials or degree of user friendliness and other functional characteristics the OECD Oslo Manual, 3rd edition (2005) . The novelty or the changes to products and services have to add value and benefits to the customer or meet the market needs. Tinder does both since it combines new benefits to the customers, that can avoid the fear of rejection and take advantage of localization feature, with the market needs because people are continuously seeking new way to connect each other and update their behavioural habits with the new trends and technological tools. Tinder is a service innovation, providing a new dating service that include a link with Facebook - making the connections more reliable and more comfortable because of the linkages among people who have common friends – and involving a game component - users can swipe each other and the gathering of the matches has huge influence from a psychological perspective. The dating service does not rely on shared interests and hobbies anymore but it shifted to the mutual liking. Tinder can be classified as a social innovation. It meets social needs of the users who want to know easier new people and creates relationships based not anymore on a likely compatibility but to physical attraction. Accordingly, the users are able to contact each other only when they mutually like so the reciprocal interest is stronger and deeper changing the way to establish relationships nullifying the emotional barriers that were making realations among people difficult. Now users can seek the dates without the fear of refusal because the app will allow the communication only between the matches Users who have already mutually liked each other.. Finally, Tinder deserves to be included among disruptive innovations. It is simple, convenient, accessible and affordable https://www.youtube.com/watch?v=KGzXWO_anLI&feature=youtu.be. In fact, its ease relies on its functionality, its convenience on the users’ win-win situation - they cannot be disappointed because Tinder does not allow you to see who disliked you. Moreover, Tinder is accessible because it is able to be possibly in the hands of 1.75B smartphones owners. Although the dating app recently shifted to a freemium business model, the main features are still free making it affordable for everyone. Tinder clearly overturned the way the relationships born. Rad and Mateen The two main cofounders wanted to address common needs. People were willing to increase the ease of having new relationships, overthrow emotional barriers of communication, simplify the approach and avoid the disappointment derived by the rejection. Tinder entered in a market full of constrains. The virtual dating led by online service has several drawbacks (less prompt than mobile dating, higher costs, less personal and safe since the web is perceived as unreliable) there were obstacles that people did not reach to solve easily. They found those barriers to the consumption and provide people for a solution to their requirements. Therefore, Tinder removes all those barriers and transform a frustrating experience as the hunting for dates in an ego boost activity deeply affected by the game component. Tinder moves to the centre the users’ need that are one of its main sources of disruptiveness. Technology performance curve From the S-curve perspective, Tinder is in the phase where the early adopter are beginning to embrace those applications. Moreover, customers are comfortable with virtual dating, they overcame the initial phase when many online dating services were launched and now they have diversified their needs served by new emerging technologies. We have not still seen the achievement of a dominant design. We are still in the stage where people are experimenting new virtual dating patterns and models. The pace of Diffusion Today Tinder, launched in September 2012, has 2 million of active users. Mateen has contributed the most to the diffusion of tinder. In 2012, after the app was created, following Zuckerberg’s path, he went to the most exclusive colleges and began to spread the app through the campuses, using the feedbacks to adjust the features of the app. By 2013, the app had 400,000 users. Then, he started mailing the biggest social influencers in LA., he said: “I learned if we could penetrate social influencers first, it would trickle down to everyone else” http://www.forbes.com/sites/stevenbertoni/2014/11/04/exclusive-sean-rad-out-as-tinder-ceo-inside-the-crazy-saga/3/ engaging just the people who have the biggest social influence they could take advantage of the bandwagon effect http://en.wikipedia.org/wiki/Bandwagon_effect . Lately, Tinder reached the mainstream this winter due to Sochi http://www.dailymail.co.uk/femail/article-2561518/Winters-unofficial-Olympic-sport-Single-U-S-athletes-admit-Tinder-turned-Sochi-dating-game.html , spreading the app in the athletes’ parties the hook-ups caused by the Tinder’s matches fuelled the buzz about the app. Source of Innovation Serendipity played an important role within the creation of the app. It is likely the two founders did not know which was the direction they undertook and the implications of what they created. While Rad and Mateen were employed at Hatch Labs a New York-based incubator owned by the IAC(http://en.wikipedia.org/wiki/IAC/InterActiveCorp ) http://www.forbes.com/sites/stevenbertoni/2014/11/04/exclusive-sean-rad-out-as-tinder-ceo-inside-the-crazy-saga/2/ , they were working on the idea of a flirting app based on mutual liking system. They just wanted to overcome some of the main typical drawbacks and fears of the offline date process that occur to both male and female: feelings as disappointment and embarrassment, uncomfortable situations (unwanted suitors and consequent unfiltered requests, meetings and messages) or the habitual uncertainty of identity of the virtual dating systems. Maybe Tinder founders did not know what they would have cause but they knew what they were addressing to: a market with several constrains that was looking for who could provide a solution to its problem. Tinder is a market pull innovation: the app is answering to a shared human need - meeting new people without the deriving feelings. Many companies had already tried to reach this goal but the market got services characterized by an excessive focus on profiles and pictures, mostly fake, lack of information of the likely match, tiring inscription system, high costs in term of time and money, to summarize a bad user experience. Rad and Mateen wanted to try to fill this gap. Even if Tinder has not been built through an open innovation process, users had high impact on the development of the app. At the beginning, the app was launched in few colleges where listening to the users they adjusted the features and usability of the app with slight modifications to address the feedbacks received. The app became more user friendly enhancing the user experience. Here you have how Tinder was at the beginning: http://www.businessinsider.com/tinders-first-startup-pitch-deck-2014-7?op=1 Standards battles The technological lockout affects Tinder in two main dimensions. The first one is the network effect, Tinder is certainly the type of innovation that relies on the effect that the users of the service have on the value of that service for the other users Innovation Management Slides Session 2: STANDARDS BATTLES & DESIGN DOMINANCE, TIMING OF ENTRY. Mathieu Chat October 2014 page 11 . The app takes advantage of the two-sided network that has two types of members, creating value each other’s because the value of the network to one type of members depends on the number of members of the other side. It entails that Tinder aims to be a standard for dating but also for meet new people for many and varied reasons. The bigger the number of Tinder users the more its value increases and appeals the nonusers. The second dimension regards the installed base. At the beginning, it could originate a technological lockout since apps that relies on networks need large installed base to function. The ease of usage, its user friendly and the needs addressed fueled Tinder installed base increasing it exponentially. Since its simplicity and its free features, I cannot talk about learning effect and switching cost. To conclude, from a wider perspective the app could consider as technological lockout complementary goods that can be the mobile phone and the smartwatch. Indeed, Tinder is a mobile app and it operates just on mobile phone and smartwatches. The availability only on those kinds of devices is both an advantage and a drawback: it differentiates from the other services making the experience more direct but limits the usage excluding tablets and laptops. Timing of entry Since it is not the first dating service nor the first dating app neither the first Facebook based mobile dating app, Tinder is not a First Mover but can be defined fast second. It gathers the main features owned by the most influential and disruptive apps - social discovery, gamification, location and messaging - including those features in a service that changed the rules of its market with its ease, user-friendly experience, reliability and level of identification. Business Model Tinder Business Model Canvas https://bmfiddle.com/f/#/z4VX5 Customer Segment Tinder focuses on mobile app users addressing the customer segment called the mass market. In fact, there is no difference between customer segments, offerings, distribution channels and level of profitability nor willingness to pay for different aspect of the offer Business Model Generation. Osterwalder and Pigneur 2010. Page 20. The different customers themselves perceive differently the features of Tinder depending on which has more value for them. Even if it could be defined as a multisided platform because “the platform’s value for a particular user group depends substantially on the number of users on the platform’s other sides” Business Model Generation. Osterwalder and Pigneur 2010. Page 78 there are not two distinct groups of customers, associated value propositions neither revenue streams. Tinder takes advantage of the two-sided network and it has some features of the multisided platform pattern but the distinction is not among customers but among the perception that the customers has about Tinder’s features. Value Propositions Tinder’s value proposition makes its service unique. Increasing the speed and frequency to whom people meet, users do not need to go in a bar they can just start swiping and waiting for their matches. The mutual liking system had a double effect, it has deleted the fear of rejection and simultaneously it has solved many problem for high-pursued women as unwanted suitors, unfiltered messages and meetings. It delivers you an ego boost experience, since users are enabled to see the list of all their matches knowing they have liked them. Moreover, through Facebook authentication it provides the identity restriction that makes the app more reliable and comfortable, the users know that the displayed Tinder profiles correspond to real people who often belong to circle of Facebook friends that intersects yours. Therefore, it adds the social and geographical proximity of the possible matches because Tinder is a location-enabled app as well. However, Tinder’s level of privacy is not affected by the interaction with Facebook. In fact, only the First name, the age and a maximum of six pics are showed as well as the social network will not share anything on your behalf. Finally, Tinder provides a new way to meet people and simplify how human court and approach. Channels Tinder reaches its users through different channels used to address the Channel phases. The channels are the Apple Store, The Google Play and Windows Store as well the webpage and blog. The apps stores with their reviews and the Blog with its post raise the awareness among customers, providing user generated experiences and app generated news. The evaluation, purchase and delivery are essentially on the stores because the content of the blog is app generated. The webpage performs its functionality after sales since users can write to Tinder if they are looking for any support. Customer Relationship Tinder has weak relationship with its customers because its value lies on the linkages that it builds. The app listens to the customers to build improvements and add new features providing them for all the necessary means to communicate and get support. The Tinder’s customer relationship is self-service Business Model Generation. Osterwalder and Pigneur 2010. Pag. 29. Revenue Stream In November, Tinder shifted from free business model to a freemium one. Since the app is capitalizing the two-sided network and is not providing a unique service, it had to build a customer base in order to attract new users – the bigger the number of swipes and matches the bigger the number of users that entails linkages that are more precise. At Tinder, they knew the demand generated at a price of zero is many times higher than the demand generated at any other price. Business Model Generation. Osterwalder and Pigneur 2010. Pag. 90. Yet everybody were wondering how the app would draw profit from the users base. They introduced their freemium business model. Tinder offers to its large base of users the service’s basic features. Users can swipe the profiles, upload up to 6 Facebook pictures, text the users that previously liked them and recently Moments http://www.gotinder.com/blog (swipe-able photos you can instantly share with all of your matches at once but for a limited time - 24 hours) and List (the function of list the matches by their personal criteria). The premium features are Undo and Passport http://www.gotinder.com/blog https://vimeo.com/111080451 . Until now, if you would accidentally swipe someone he or she would be lost in the Tindersphere. Undo allows users to take back their last swipe. Instead, Passport lets you change your location to match with people around the world. In fact, so far Tinder had a geographical constrain showing only users in a certain range of distance. Passport embraces travelers’ needs and increases the value of the service expanding its level of reach. Since the free basic service have a low marginal cost, they can afford to provide users for this ancillary features Business Model Generation. Osterwalder and Pigneur 2010. Page 96. Tinder has a low average of cost of serving a free user and it is likely that the price they are charging (probably 0,99 €) will increase the rate at which free users convert to premium customers. Key Resources The Platform is the most important asset in the fremium business model, allowing free basic service to be offered at low prices Business Model Generation. Osterwalder and Pigneur 2010. Pag. 102. Therefore, the app stands for the main mean through Tinder delivers its value proposition - the virtual place where users like or reject each other, matches and text. Then, we have intellectual resources as the brand, worldly acknowledged for the boost it brought in the human relationships. Finally, the customer database that includes all the matches, lists, messages and data ongoing evolving. In fact, the more we use Tinder the more the precision the algorithm has - recording tastes and changes in interests and friends. Human resources are necessary as well, the team and its perspective on the goal and mission of Tinder had lead the app through a development that tried to address to customer feedback and requirements. Moreover, the initial decisions of the team shaped the evolution of the app, as the choice to pilot it in the colleges or spread it among L.A. social influencer. Although we are not in knowledge-intensive industry, as pharmaceutical or software ones, the human resources owe their importance to the vision they bring to the developing of the app. As Financial resources, we must mention the IAC, which is still providing the necessary financial support – it stands also as a drawback since the founder owns just the 10% of the app. It would be not feasible not quoting, Since Tinder is a mobile app and function only on smartphones and smartwatch, the mobile network is a key resource differentiating the service accelerating the meeting process. Key Activities The key activities regard the management of the platform and its promotion as well as the provisioning of the service. Tinder has to manage the platform where each users have to see possible matches based on user preferences, location and interests. The algorithm improves its accuracy progressively with the usage of the app, updating the possible matches displayed with both new friends added on Facebook and in-app swipes and rejects. Since the beginning, Tinder promoted its service and brand image in an unconventional way. They started with the colleges in order to have feedback from an audience used to technology. Then they have carried on targeting the social influencer and big events to turn to mainstream the app and engage the entire audience, finally Tinder parties are the new disruptive way to promote the app implementing in the reality the benefits of Tinder - parties perceived as safer, more intimate and personalized. The goal of Tinder is providing a service that improves how people meet in real life, quoting its motto: “it’s like real life but better”. Their service is similar to the real life approach but without the correspondent drawbacks. Now people are willing to jump into interactions with much less information about each other than earlier dating platforms provided http://www.forbes.com/sites/jeffbercovici/2014/02/14/love-on-the-run-the-next-revolution-in-online-dating/ , they wish to meet, text and exchange information with counterparties to whom know less information because of Tinder’s strong connection with reality perceived by the users due to its promptness. The service allows people to see the activity while it is proceeded by users, making the virtual dating common and shameless – if everyone does it, it is not anymore pathetic and awkward. Key partnerships The first important key partnership affect one of the main functionality of Tinder: the geographical proximity. The app display the users nearby you and to make it available, Tinder had to agree on a partnership with Google Map. Once Tinder shifted to the fremium business model, the geolocalization increased its value since one of the two features, Passport, uses the geolocalization to add value to the customer. Recently, Tinder partnered with Amnesty International to make aware people of violence of women http://www.amnesty.org.au/news/comments/34082/ . Since the app was accused of sex discrimination, it helped to rehab the image of the brand. Therefore, I can define such kind of partnership that act on the perception that the customer has about the brand key ones. Cost structure The costs for Tinder are definitely value driven. The additional value of the app is the service it provides, hence it cannot decrease any cost connected with the value proposition. The highest costs are linked with the platform management and development, Tinder has to guarantee simultaneously the stream of possible matches updated with correspondent modifications. Then Tinder has to bear costs that regards, its employees, the software development and the cost related with the premium features. Besides, there are also Google Map rights’ and storage costs for the data of each customers and the expenditures for the promotion of the app. Ongoing Updating of the data Maintenance and Diagnostics systems Promotion of Service Google Play, Apple Store, Windows Store Google Maps Tinder webpage and blog Mobile Inventory & Delivery system Managing Digital Platform Software IT Storage Information Algorithms Software Development External Value Chain Activities with Partners Suppliers value chain Company value chain Channels value chain Customers value chain Apple Store Google Maps Website and Blog Windows Store Google Play Mobile App Users Apple Google Maps Facebook Intellectual property It seems Tinder did not patent its service. It is possible to find a patent about an application for mobile phone, called Lasso http://www.google.com/patents/US20070037574 , that works with the same principle of Tinder, “Hot or Not”. Two students filed the patent in 2005 before the beginning of the smartphone era. Currently, there are not patents available on WIPO website nor on US patent office, neither patents filed from Hatch Lab, the incubator where Tinder was born, or IAC, the company that own both the incubator and Tinder. It is unknown how Tinder is protecting its functionality of displaying the possible matches through an order based on a score that depends on the social proximity on Facebook. Instead, Tinder protects its Trademarks with US Trademark http://www.wipo.int/branddb/en/showData.jsp?qi=4655-1417967152980&ID=USTM.85980800&LANG=en&NO=1&TOT=3 , Australian Trademark http://www.wipo.int/branddb/en/showData.jsp?qi=4655-1417967152980&ID=AUTM.1589323&LANG=en&NO=0&TOT=3 respectively registered on 02/04/2014, and 04/11/2013 (in Australia it will be protected for 10 years). While in Canada, its registration is still pending although it has been filed on 01/11/2013. The owner of trademarks in US and Australia is Tinder, Inc. Corporation and in Us Hatch Lab corporation as well. References bercovici, j. (2014). [online] Available at: http://www.forbes.com/sites/jeffbercovici/2014/05/06/linkedin-for-love-tinder-for-business-and-other-off-label-technology-uses/ [Accessed 29 Nov. 2014]. bercovici, j. (2014). 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