Yagan sold OKCupid for $50m and Sparknotes for $30m
Sam Yagan explained the secret to OKCupid’s success mostly through one word: quality.
The dating website became popular after creating its own blogs and other content based on data, from the type of people who match because of a shared interest in horror stories to how people narrow their search radius for prospective dates when gas prices go up.
“None of these are clickbait, none of these are artificial, none of these are especially provocative,” Yagan said. “But these are the kinds of posts that we’ve put up. They got millions and millions and millions of shares and reads and views.”
Yagan spoke at Hustle Con 2016. Below is a lightly edited version of his full speech on the key to good content.
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There’s a big black box in the middle of my story. There’s probably a message in there somewhere. But you can read all that, so I’ll do a quick voice-over. I was born in the cornfields of Illinois and spent my childhood doing a bunch of things that you do in the cornfields. Certainly nothing that would prepare me for a life of entrepreneurship.
Then I went to college. I was in college in the late 90’s, everyone here is way younger than that. My class was the first class in my college that was assigned an email address, which I thought it was pretty interesting at the time. I studied applied math. One of my biggest regrets is not studying computer science, I think I should have. I mean, applied math is plenty hard enough, but for some reason I decided not to do that.
One of my friends, on Thanksgiving of our senior year, reserved a domain name called thespark.com and started putting up some content. He sent me a link to the content and said, “You should check this out.” I was like, “This is just silly.” So I ignored it and I went through the regular recruiting process. I ended up getting a job with a consulting firm and I was all set to become a consultant. Then he emailed me again and he said, “Hey Sam, I’ve now got a few hundred thousand people visiting.” We didn’t have MAU at the time, we had unique visitors.
He was like, “Hey, I’ve got a few hundred thousand unique visitors, you should really check this out.” At the time in the late 90’s, there were still so many ideas that hadn’t been done yet. Now you kind of have to be really creative to start a new company. You have to create some app that does something that you’ve got to concoct two or three ideas together. But at the time, there were just all these obvious things that hadn’t been done yet, and so we started this company called thespark.com. We’ll get into more of that later.
But we basically pivoted that business to be SparkNotes. We sold that company. We got very lucky, we sold the company six weeks before the market crashed in 2000. I sold it, as Sam said, for way too much money, and then the company we sold it to went out of business 11 months later. So that’s what you get for buying a company for way too much money, a lesson to be learned. But for some reason it’s never learned by acquirers. I then started a company called eDonkey. Anyone here remember eDonkey?
Okay, peer-to-peer file sharing. That was a very interesting ride for me, get it? Okay. That was a very interesting ride. I ended up getting sued by the record labels for a billion dollars. I testified before the Senate Judiciary Committee, started a lobbying group to try to lobby Congress. I’ve got a whole bunch of war stories about that that I’m happy to talk about. I actually went and got an MBA, which I know is generally scorned and looked down upon in the tech community. Then decided to go back at it and start OkCupid with the same founders that I started SparkNotes with.
We sold the company to Match. While it took us eight months to build SparkNotes into a business we could sell, it took us eight years to build OkCupid into a business we could sell. Sold it to Match, and then expected to do my year at Match and get out. That’s what most entrepreneurs do when they sell their company. But the folks at Match took a huge gamble on me and offered to make me CEO of Match. I went from one day running a $10 million business with 30 employees, to running a billion dollar business with 1.000 employees all around the world.
That was a huge, huge learning experience for me. I spent three and a half years as the CEO of Match. While I was the CEO of Match, we most famously incubated Tinder and grew it into one of the most successful startups, really ever. It’s certainly one of the most successful startups to come out of a corporation. We spent about a billion dollars on acquisitions around the world, and then we had an IPO last November. So that was my three and a half year run as CEO of Match.
Then while I was doing all that, I moved back to Chicago and I’m very passionate about the Chicago tech community. So I started what is now Techstars Chicago and we’ve graduated 60 companies through that program in the last six years. Then I started a small little venture capital fund called Corazon Capital, where I really have a totally different approach to how the relationship that VCs and entrepreneurs should have together. I think my 16 years as an operator, I think I bring a very different approach to how to mentor and how to develop great entrepreneurs.
So that’s kind of what I’ve been up to, but they asked me to talk about content. Is it commodity? You’ve heard both, content’s just a commodity or content is King. So I’m going to take you way back into the 90’s, to our site called thespark.com. We, again in the span of just a year, became known as … we won basically a dozen awards as Site of the Year in 1999 because of our content.
Here’s an example of some content that we wrote. It was called The Fat Project. We found Eric and Nicole and we offered them $3,000 if they could gain 30 pounds in 30 days. How many of you think you could gain 30 pounds in 30 days? That’s impressive, okay. So basically, this was reality TV before reality TV or reality internet before reality internet. We took pictures of them in their underwear every day for 30 days. I won’t take you through all 30 days, you can find it on the internet.
Here’s day 15. Let’s go back day zero. Day 15, getting there. All right, so here’s a question. If this is day zero and this is day 30, do you think either of them made it? How many of you think Eric made it? How many of you think Nicole made it? No. So it turns out you guys are kind of wrong. Eric made it, Nicole didn’t. What Eric was able to do is really nail day 30. I mean, he gained six pounds in the span of two hours, which is pretty impressive.
So you can imagine, we were kind of doing this every single day and this became a total viral sensation on the internet. So we said, “Okay, that Fat Project was pretty cool. What else can we do?” So we did something called StinkyFeet, where Christian Rudder, who’s now of OkTrends fame, tried to give himself athletes foot. He literally walked around locker rooms and shower stalls with no feet on for 30 days. StinkyMeat. We just put a plate of rotting meat out in the yard and watched the maggots. It’s all good stuff. Then we did StinkyMeat two, because it was so good to do StinkyMeat one.
So, this was an example of a business that, based on content, generated a ton of value in just a few months. We did something else called these personality quizzes. We were really the first company in the 90s to do personality quizzes. This was not the final tallies, but these quizzes were taken over a hundred million times in one year. This was pre-social pre any of the sort of built-in virality systems that we now have today. This is all just on the quality of the content that we built.
Then we built eCards. eCards were a thing in the 90s, one of my favorites. Just think about it. So, the problem with this kind of content though is that you have to constantly produce humorous content. We realized, by the time we decided to become a company, but even before we incorporated as a corporate entity, we decided the humor business is a crappy business to be in, because you have to be funny every single day. So we thought to ourselves, “Well, what other business can we be in? We’ve got all these millions of users, what else can we do?”
So we looked up, I was in Chris’s dorm room, and we looked up and he had CliffsNotes up on his shelf. My other partner Max just looked up and said, “We should do SparkNotes.” We didn’t do any market research, we didn’t do any ideation on the name. The name just kind of came to us, and we started making SparkNotes. We found 10 of our English major friends. Any of you English majors? Yeah, so it turns out English majors will work for free, almost. So we basically went to these English majors and said, “You just spent $100,000 on your education paying our school to let you write papers. We’re going to pay you $400 to write a paper for us.”
So, these 10 English students went out on their spring breaks and they wrote SparkNotes and they brought them back. We put them up on the site and we got all this hate mail from our users who said, “I can’t believe you don’t have my book.” Which is great, it’s a great kind of hate mail to get. So we went, we produced another 100 SparkNotes over the summer and launched, and really in the span of one year, killed CliffsNotes, which had been around for 50 years. Well, SparkNotes wasn’t about the content, it was just because it was free. So it was a commodity. But there were tons and tons and tons of study guides out there.
Yeah, we were better marketers, yeah, we had better brands. But at the end of the day, it was a no-brainer to students that we were better, and it was even pretty clear from professors and journalists that SparkNotes were the best. So that pair of businesses, The Spark and SparkNotes was the business that we built in 11 months and sold, first to an internet company called [inaudible 00:10:51] and then later to Barnes and Noble.
So, OkCupid is the business I’ve been working on for the last, God, 12 years. I feel bad for anyone trying to do dating businesses, they’re really hard. The hardest part about them is how do you build critical mass, right? How do you get the liquidity? The way we did it was with content. We went back to the well of the quizzes that we had built at The Spark and we said, “Well, let’s build an online dating personality test, and let’s make the personalities that you can get really, really funny.”
So we had 32 different personality types, you don’t have to read all this. The conference organizers said you can’t have more than 50 words on a slide. I was like, “Who makes that kind of rule?” So anyway, I think there are more than 50 words, but I’m a rule-breaker, I don’t know what to tell you. But we had all these different personality types, and people would post their personality types all around the web. That was how we drove a lot of traffic to OkCupid in the early days. We then said, “Well, let’s keep going down this content road and let’s use content to help people find their matches.”
At the time, eHarmony was one of the market leaders. Have you guys seen the eHarmony commercials with the old guy and the granddaughter? Isn’t that creepy? So, I’d never understood that marketing concept. Yeah, right. We basically let people write their own questions, and these are just eight questions that I found, and we let people create the content and then we created algorithms that sorted the content, sorted the questions, that allowed the most interesting content to come to the top. These are just some of the questions. They’re actually very interesting questions, if you read them and think about what your answer would be and then how you’d want a potential date to answer them. But we’re going to take a quick segue out of this conversation and do some audience interaction.
How many people enjoy horror movies? Okay. Have you ever traveled alone in a foreign country? Okay. Wouldn’t it be fun to chuck it all and go live on a sailboat? Okay. Of the thousands and thousands of questions that are in our database, those are the only three that predict relationship success. If you and a potential date both agree, yes, yes or no, no, on these three questions, you are statistically more likely to end up in a successful relationship.
Okay, show of hands. Oops, sorry. Show of hands. For men, if you would answer yes to any of the questions on the left under men, please raise your hand, men, and leave them up for a second. Okay. Women, how many women like the taste of beer? Okay, hands up, keep your hands up. Everyone who’s raising their hands right now are statistically more likely to have sex on a first date. So, hopefully you paid attention to … there’s a party tonight, right? So, hopefully all of you were paying close attention to that. Back to the regular scheduled programming.
So we have all this interesting content, right? So we knew that yes, we were using this content to improve our matching algorithms. We were using this content for targeting ads, but we thought we can really use this content to go drive more traffic. So we did what many people do and we called a PR firm. This was the friendly PR firm that we called, Schwartz Communications up in Boston. They said, “Great, we’d love to take on the account.” So we started mining our data, and one of the first nuggets of data that we got was that when gas prices go up, people narrow their search radius. Super awesome, right?
After you say it out loud, it’s obvious that that should happen. But it actually happens, right? That’s so cool. So I was so excited, right? It’s like, “Yes, we have this great finding.” Schwartz called 100 journalists. Every one of the 100 journalists was like, “Oh my God, that is so cool.” Every one of the 100 journalists said, “I’m not writing a story today on the effective gas prices on dating. Call me back next week with your next little nugget.”
So we did this over and over and over again for a year, for six months, and no one really ever wrote me stories about the things we wanted them to write stories about. So we said, “Well, screw it. We’ll pivot, we’ll try something else, we’ll iterate.” So we started blogging.
OkTrends became ultimately super famous, but it took us a while to get our footing. I should give all the credit to Chris and Christian who did the writing, I just get to talk about it. We first thought that we would have to be really provocative with our talks, so this was the very first blog post we wrote. I remember thinking when it went up, I remember thinking, “Wow, we’re trying to build a dating brand that people feel good about. Do we really want rape fantasy to be the thing that everyone associates with OkCupid?” But Chris and Christian were very … they said, “Look, we have to be provocative, we have to go out there and we have to sort of scream real loud to get the attention.”
First of all, some super interesting findings. I mean, Wyoming? Who knew? Any Wyomites in here. No? Okay. So anyways, this was the very first blog post we did, but it turns out that that actually wasn’t what we needed. The data was so powerful, that first finding of gas and gas prices in search radius, that kind of stuff ended up being much more compelling, it just had to be packaged the right way. These ended up being some of the most successful blog posts that we wrote. You’ll see, none of these are clickbait, none of these are artificial, none of these are especially provocative. But these are the kinds of posts that we’ve put up. They got millions and millions and millions of shares and reads and views.
There was a time, in the summer of 2010, where we were literally on the front page of a Sunday Times section three weeks in a row. One was Sunday style, one was arts and one was business, where The New York Times is basically just saying this content is unbelievable. I would argue that the blog probably is the primary reason why we were able to sell our company. Probably on its own in the span of a few months, probably generated, I don’t know, $20, $30 million of equity value to the business.