Grindr: Unique Positioning in the World of Geosocial Networking

How Grindr was able to leverage network effects and overcome traditional problems facing dating apps to “grind” its way to a $240m payout

Market of Dating Apps

Dating/geosocial networking apps have become big business.  15% of Americans use or have used dating apps (as of early 2016) and the trend has caught on across the globe.  Dating services have been popular for decades – before apps became ubiquitous, there were websites ( and eHarmony) and before that there were matchmaking services.  Business models have varied greatly in the industry, with some platforms charging a success fee, some charging membership fees, and others simply relying on advertising to turn a profit.  Over time, as apps became more popular, the advertising and freemium models have become the most common monetization methods.

Dating apps face three main issues in attempting to achieve scale that I believe are fairly unique to their subset within platform businesses.

  • First, while scale is important for all platform businesses, I think that the location-based nature of dating apps makes scale important in whatever you view as your key geographic areas. While a company like Amazon can ship to any location within the U.S., dating apps don’t have it so easy.
  • Second, it’s incredibly easy (and almost expected) that users will multi-home, and not just over the course of a week, but over the course of a few minutes. Multi-homing has absolutely no barriers in this industry.
  • Third, and most uniquely to dating apps, is the bizarre conflict of interest where dating apps would actually prefer that its users fail. If a user has success and finds a partner with whom they enter a monogamous relationship, they will no longer continue using the platform and the dating app will lose their business.  It would like if someone had a timely successful Uber ride to airport and then deleted their account – it makes for tricky business for the companies looking to leverage and maintain their user base.

Grindr’s Positioning and Strategy

Grindr is a geosocial networking app that was founded in 2009 targeting men who have sex with men (“MSM”).  The company is the market leader in the MSM segment and has become almost synonymous with gay networking apps.  Grindr, which is one of the highest grossing apps ever, achieves approximately 75% of its revenue from their premium version which unlocks various upgraded features for users.  The other 25% of revenue comes from advertisements.

To combat these three critical issues above, Grindr has been successful due to the following features and choices:

  • Given that Grindr targets MSM, they don’t have to worry as much about users being too spread out as gay and bisexual men tend to cluster into large metropolitan areas. Simply by the nature of their customer, they can combat the issue other dating apps face when their users become too spread out.  This might have been conscious choice by Grindr or an inadvertent positive side effect.
  • Founder Joel Simkhai notes that while multi-homing is inevitable, his company has combatted this problem by being the first entrant into the MSM-focused market, building a strong user base that became comfortable with their simple platform. The company does virtually no advertisement, but word of mouth has enabled the company to scale quickly.  The comfort (or perhaps it should be described as an addiction) with the platform has led Grindr to third place among its peers in average sessions per day (see Exhibit 1).
  • Regarding the conflict of interest between the users and the company, Grindr circumvents this issue but never portraying themselves as a “dating app” where one can find a serious relationship, but as a “networking app”. This distinction has led many users to leverage Grindr simply for sexual encounters – this is beneficial for Grindr because they are now likely to retain users who have successful experiences using their app.  Evidence of this can be seen in the Exhibit 2, which shows that Grindr has the lowest weekly churn of any of its competitors.

Grindr’s success has been undeniable and ultimately led to their acquisition by Beijing Kunlun Tech, a Chinese game developer, for $240m (note: this was a two-part acquisition; the second part of the acquisition valued the company at $400m).  Grindr’s last reported net income figure before the acquisition was $13.7m in 2014.  The company has even forayed into traditional media by launching an online news platform for LGBTQ stories.

See this YouTube clip for a look at the difficulties of gaining scale in this increasingly competitive industry:


Exhibit 1

Exhibit 2




Opendoor – a new platform marketplace for home buying in the US


Grubhub – Easy for the customer, hard for the restaurant?

Student comments on Grindr: Unique Positioning in the World of Geosocial Networking

  1. Very interesting read, Zach! It feels kind of serendipitous that Grindr stumbled upon a customer that was typically clustered geographically and that preferred repeated ‘networking’ interactions, but as you point out, that’s key to their success! I wonder if, going forward, the recent acquisition by a Chinese company will impact its usage in some markets such as the US. As WaPo points out (, some of their users might be spooked by the undefined regulation governing data privacy in China.

  2. Very interesting to see how they got around many of the traditional issues of dating apps! I think one other thing that helps their cause is that they only need to cater the platform to one gender. For example, one study showed that men prefer a long list of matches while women prefer fewer more curated matches. By catering to a more narrow demographic, they can focus on the features the customer really values.

  3. Very interesting post Juan! The third dynamic of affecting platforms in the dating space (i.e., that their incentives are not necessarily aligned with user success) is extremely interesting and not one that I had thought about much before. On the multi-homing front, perhaps some of their plays around media will make users stickier/ less likely to multi-home. By being first, presumably they have better trained algorithms for matching as well that could reduce desire to multi-home. The acquisition by a Chinese firm is interesting — I wonder if there are/ will be any negative effects associated with Chinese LGBTQ rights track record.

    1. Meant to say Zach 🙂

  4. I’ve been fascinated by Grindr’s recent push into content development with their online magazine Into More, which Kara Swisher covered on Recode Decode ( You highlight well the distinct features of Grindr’s market that make it such a valuable platform. With the magazine, though, it seems that it’s also trying to transcend being strictly a network at all, capturing and keeping the attention of its users even when they aren’t able to connect with other users. Grindr has often been an innovator in the space—it will be interesting to see if Tinder, Bumble, and others follow it into content development as well.

  5. Thanks for this interesting post Juan. One other challenge that dating apps have historically faced is that while these platforms clearly have a strong network effect, driving virality can be challenging as users are embarrassed to disclose that they are using these apps. From your post, it seems that this is another element that Grindr has managed to get around with growth coming from WOM with limited paid customer acquisition. I wonder if the target market and positioning as a ‘networking’ app makes talking about the app less ‘taboo’ as it were and drive the growth of the user base, which reinforces its position as the app-of-choice and reduces the likelihood of multi-homing.

  6. The acquisition by a Chinese company is very interesting given China’s stance on homosexuality. WeChat doesn’t even allow users to send the rainbow flag emoji despite it being available in emoji keyboards. I am curious as to what the future intentions are for Kunlun Group moving forward and if there will be any major changes to the product or expansions into other geographies.

Leave a comment