Dawoon Kang and her sisters turned down a $30m offer for their dating app. Did they make the right call?
9 Minute Read
Just the thought of online dating elicits a collective groan among anyone who’s done it. And that’s precisely why Dawoon Kang and her two sisters founded Coffee Meets Bagel: They wanted to improve one of the most anxiety-filled stages of people’s lives with technology that makes them forget the pain points.
Thanks to an intelligent algorithm that makes cupid jealous, the social networking site serves as a shortcut to meaningful conversations for all the ready-to-settle-downers.
Kang’s story is an inspiration to female and minority entrepreneurs. Among her career highlights:
- She and her sisters, Arum and Soo, started the app in 2012, using in-depth profiles and funky icebreakers to transform online dating.
- The sisters famously turned down a $30m buyout on Shark Tank in 2015. Their annual revenue now exceeds that amount.
But a big challenge awaits: In the spring of 2019, Facebook announced it was entering the online dating space. That’s on top of more than 8k other dating businesses, all vying for a share of the estimated $3B market.
We sat down with Dawoon to discuss everything from how to pick the right industry to finding balance in cutthroat times.
When you and your sisters were deciding what type of business to start, what made you decide on a dating app?
My sisters and I always knew we wanted to do something entrepreneurial together. Both of our parents were entrepreneurs, and that had a big influence on us. Our dad started a metal recycling business in Korea with his brother right after college. So we grew up watching him manage a factory.
He always included us in some way, whether it was trips to the factory or being his audience when he had to practice a management speech. He would show off models and plans he created and tell us why they were effective in getting more margins out of the business.
We didn’t understand a lot of it, but that’s what I saw growing up. So we knew from the very beginning it was something we wanted to do.
At the same time, we had the pressure that typically exists in Asian families — studying hard, going to a good school, and working at a top company. So we went that route before hunkering down on our own thing.
Then, 7 years ago, when my twin sister graduated from business school, she said, “Hey, you know what? At this point, we have so much work experience among the 3 of us. We should try to do something on our own.”
So we decided to give ourselves a year to do it, and if it didn’t go anywhere, we would let it go. But if it did, we were all in. And then she dedicated herself full-time to looking for business ideas.
One thing we knew is that we didn’t want to go B2B. We wanted to develop a product that we could see millions of people using. Consumer dating just kept coming up as a really common pain point that seemed easy to solve but wasn’t being looked at in that way. Some of us were single, so it was also relatable.
After looking at the market size and growth potential, we thought we could create a product that addresses a wide space and significantly improves the user experience. And that was the genesis for Coffee Meets Bagel.
How did you assess the market potential?
This is an interesting market because if you think about the number of singles that are looking to meet people, it’s a huge number. But if you think about how much people are actually spending on dating apps, that’s a proportionally small number. The estimate in the US is that it’s only about $2B. But the average American single spends $1,500 going on dates. We knew there was so much potential here and that the dating apps hadn’t cracked it yet. We saw that if we could capture even a sliver of this market, it would be huge. And of course, we looked at the competition and what was missing. What could we do that would give us the highest likelihood of success?
Did you know how competitive the space was before you got into it?
It’s a very competitive space, but I don’t think it’s more fierce than when we started. We knew who the big players in the industry were. What we didn’t realize was how many new players would try to jump into the space every day. With the rise of the apps, the barrier of entry to a lot of businesses has become so low that new entrants come in very frequently.
In the beginning, that rattled me. I knew it was competitive, but I didn’t know it was so bad. It took me a bit to be like, “It’s just part of the game.”
Facebook just announced a dating product. What are your initial thoughts?
The fact that they are getting into the business tells you how much potential is in this industry. But to me, they’re just like any other competition. Of course, we have to pay attention to what they do and learn from it. It may or may not impact the strategy that we take to deliver on our mission statement, which is to create real connections and inspire personal growth.
Because we definitely want to do it in a different way. So, of course, if you want to be different, what your competitors do matters. Especially when they are an 800-pound gorilla, like Facebook.
How far along was Coffee Meets Bagel when Mark Cuban offered you $30m on Shark Tank?
I think we were on year 3 and had raised a little over $2m. We were still really early stage. We were looking for some investment and were absolutely were not thinking about selling.
We were looking for $500k for 5%, but Mark Cuban and all the sharks are super smart. They have an incredible amount of net worth. What I love about them as investors is that they’re all also operators. That’s really important, to have an operator as your investor and board member and advisor. So I think, all in all, that’s kind of what we wanted to get.
The exposure was huge. Someone has equated being on Shark Tank to getting a couple million marketing dollars that you don’t have to spend. So as a small startup, being able to get access to a TV network is a dream come true. The experience was incredibly positive. It helped us reach more people and put our name out there all over the world.
Sure, we got some people saying nasty things when we denied Mark’s offer. When you get more visibility, you get more haters. So I didn’t really care about them.
Knowing what you now know about the business, would you have made a different decision about selling the company?
Well, now we’re valued at over $30m. At the time, we were like, “Wow, this is such a great validation of all the work we put into building this business.” Now, we’d be like, “No way.” Because we’re much bigger.
The fact is, people hate using dating apps. They are exhausted but feel like they have to use them because they want to meet people. So we clearly haven’t completed our task of eliminating pain points. Until we achieve that, I’m going to continue.
Did you ever use Coffee Meets Bagel as a consumer?
I did, actually. Two of my previous relationships started by meeting through Coffee Meets Bagel.
Recently one of my employees asked me: “Hey, is there a difference between running the business when you were actually using yourself vs. now?” Because I’m engaged now.
It’s interesting. When you’re running a consumer business, empathy and product market fit are really important. Being able to understand and think and act from the position of the customer is crucial. When you are actually the customer, that comes naturally. When you’re not, it’s a little harder — and being able to think about customer issues takes extra work.
What’s great about running the company now that I’m engaged is I know what it’s like to be in a really fulfilling, amazing relationship. So my desire to be able to create a product that enables every single person on the planet to be able to experience this has become that much stronger. I’m more motivated than ever about our mission.I know how important it is and how transformative a great relationship can be for everyone.
One thing I do is use Coffee Meets Bagel as my friend, who’s an actual user. I run the ‘Sam B.’ account for her. I care about her and want to make sure that she finds an amazing relationship through Coffee Meets Bagel. So I’m actually using it for real, but not for me. But it allows me to still identify pain points, because I run a real account.
You and your sisters all went to Ivy League schools. What difference do you think that made when entering the real world?
Being able to get into an Ivy League school was a confidence booster for me more than anything else. I think the relationship you’re able to cultivate with yourself and the way you view yourself is crucial when it comes to creating the life you want to live.
You realize, “Oh, I actually can do this. And if I want to, I can get into these schools that seem hyper-competitive.”
I’m sure there are some people who are just confident. They don’t need to prove themselves to themselves. I was never one of those people. That’s why I think it was really important for me to change the narrative that was in my head.
A lot of people told me I couldn’t get in because English is not my first language. My SAT scores sucked. So just being able to prove it to myself that I could—that was huge for me.
And, of course, the network is really helpful. It’s not always about how smart you are. A large part of success is being lucky and who you know.
You work in a cutthroat industry that just got more competitive. What does a typical week look like for you?
I’ve always had a morning routine Monday through Friday. I usually get up around 7 or 7:30 am and do my meditation and exercise.
I’ve recently adopted the works of Hal Elrod. He invented a concept called Morning Miracle, and he has a series of books around it. It’s a 6-step method: affirmation, visualization, meditation, exercise, read, and write. He found they are all common factors among people who were successful in their own field.
The exercise portion is very important for me. It’s not about getting the heartbeat up — sometimes I just do stretching. Again, it’s the relationship with yourself. That fact that you actually carved out 10 minutes to exercise. It changes the way you view yourself and changes the way you start the day.
I always do all 6, even if it’s 1 minute each. Then I start my day.
Then I usually have back-to-back meetings, but I still do my best to carve out an hour or two to do some creative work.
Three out of five weekdays, I work until 6 pm or 7 pm, then I eat dinner, then I start working again until I go to sleep around 11 pm or midnight. On Friday night, I usually don’t work. And on Saturday, I do whatever I want. I put in a couple of hours on Sunday because when you’re working on something that you really, really enjoy, I don’t think you get tired. It’s very important for me that the time I put into my work is spent doing something that I actually enjoy.
Not everything I do is something I enjoy. But when I’m doing a lot of things I don’t enjoy, then I start getting burnt out. That’s why it’s so important to keep a balance.
If you were starting over, how would you make your business stronger based on what you’ve learned?
I think being really intentional about everything. One thing I like to tell new entrepreneurs is that whatever you start, you’re going to dedicate the next 10 years to it. That time that you think you should spend before you commit, double it. The most important thing is that you feel really excited about what you’re working on. That passion is what’s going to carry things through.
Your company was started by female minorities—something that tech is sorely lacking. What’s it going to take to see changes?
Time. It’s a culture change, and those take generations to stick. Really, I think that can only be solved through true, true diversity. When young people grow up, they should be seeing just as many women entrepreneurs as they do men. Religions and races too. There should be no biases that make us think, “Oh, this field is only for a certain type of person.”
It’s only when we grow up in that kind of environment that we can eradicate this biased thinking completely. And that’s why this won’t happen overnight.
I know this is true because the only reason why I ended up going into entrepreneurship with no reservations is because I was exposed to it early. For me, I didn’t question whether I could do it or not.
I actually love talking about this topic because this story needs more exposure.To every girl who is thinking about getting into business or tech, I want them to know it’s more than possible.
Sharing stories and encouraging more minorities to get into different fields of study is a step in the right direction. Eventually, the field will become so diverse and so well-represented that we won’t even be talking about this.