He Sold His Startup for $575 Million, and He Gets to Keep Every Penny
Usually when a company gets acquired for hundreds of millions of dollars, the founders only keep a small percentage of the company. That’s because after multiple rounds of investment, the founders get diluted.
Markus Frind, on the other hand, kept close to 100% of his startup, PlentyOfFish, which a lot of you have probably heard of. It’s one of the most popular dating sites on the planet.
On Tuesday, PlentyOfFish was acquired for $575 million by IAC, the same guys who own Match.com, Tinder, and OkCupid. And Markus Frind gets to keep all of it.
How? By never ever raising a single round of investment.
“By the time I found out what VCs were, I was already making millions in profit and I didn’t see the need to raise money because I wouldn’t know what to do with it.”
It’s quite amazing how PlentyOfFish reached its scale without any VC investment. Nowadays it seems quite impossible.
In the early days of the Internet, most dating sites were paid. Markus had the bright idea to make his free.
In an interview with Inc.com he remarked that he was appalled with how terrible the paid dating sites were at the time.
“It was this rinky-dink little site charging money for something anyone could make. I was like, I can beat these guys.”
POF used a lot of acquisition strategies that would be very hard to replicate today. For example, the site ranks very highly for the term “free dating site” — something that would be very difficult for any new website to do today. The fact that POF came into the market at the time it did helped it to gain a critical mass.
The site was monetized very easily. Google Adsense revenue brought in thousands and then millions per month. He also sold direct advertising to various companies — most of them in the dating niche. A lot of premium dating sites went to him hoping his user base would eventually convert to paying customers.
Markus kept costs low. Even with millions of pageviews and tens of millions in revenue per month in 2008, the site was kept afloat with only 3 employees and around 8 servers. Markus remarked that the reason he was able to keep his startup very lean was that he wrote very efficient code and kept everything very simple. Instead of adding a bunch of crazy functionality, his site just worked.
Now in 2015, the dating game has changed dramatically. Fortunately for Markus Frind, it’s now time to cash out.