Tinder is a relatively new company that has thus far proven to be highly effective in driving alignment between its business and operating models.
Tinder provides a digital platform that “empowers users around the world to create new connections that otherwise might have never been possible.” Although there were plenty of quality platforms to help facilitate communication with people we already know before Tinder, the platforms for meeting new people were largely online dating sites that require the user feel out cumbersome profiles and questionnaires and utilized robust algorithms to aid users in the matching process.
Tinder’s Business Model
Tinder entered the scene in September 2012 with a mobile app that provides value to its users by removing the burdensome signup process of existing platforms, as well as putting the match making power in the user’s control with a simple and streamline interface.
Users easily signup for a free profile through Facebook, which provides a layer of security from people who try to lie about who they are. Users then select a few pictures from Facebook to be shown on their profile, enter their gender and age, and input a few match making preferences.
Using the Tinder app is similarly straightforward. Tinder displays a profile picture of an individual that matches your preferences. You can tap into the profile to see more information, and if you’re interested in connecting with individual you swipe right, if not you swipe left. All swipes are anonymous unless two users both swipe right on each other (It’s a Match!). Once matched you will be able to chat with the user drive the relationship in a way you want from there.
Tinder captures this value in the form of Tinder Plus, its paid service which launched in March 2015. With Tinder Plus users get features such as unlimited right swipes, the ability to choose the location of match searching called “Passport,” and the ability to go back to a previous profile and swipe right instead of left called “Rewind.” Tinder Plus costs $19.99 for users over 28 and $9.99 per month for users 28 and under.
Tinder also captures value in the form of advertisement revenue beginning in April 2015 in the form of a user landing on the advertisers profile while swiping. The user can immediately swipe left or right on the ad or watch the ad and click on links within the ad for more information. Tinder further collects the ad swiping data to provide back to the company.
An Aligning Operating Model
Tinder has several key tasks it must execute on to properly fulfill its value proposition and capture a portion of the value created:
- Drive user adoption and engagement
- Maintain a stable, functioning, and accessible mobile application
- Evolve the app functionality to meet changing user demands
Tinder has to have the capacity to maintain an app with a rapidly growing user base and unpredictably variable bug issues, the talent to be innovative with product development, and the structure and culture to be fast-moving in response to consumer demands.
From its West Hollywood, California headquarters, Tinder has a modest 60 employees. With such a small employee base, Tinder avoids the need to have slow bureaucratic processes and maintains its capability to rapidly respond to consumer demands. Furthermore, employees have unlimited vacation and flexible working hours, allowing employees to work more when high priority issues need a swift resolution and less when things are status quo.
Tinder organizes its employees into functional positions to ensure that the critical functions of maintaining an app are accounted for, but uses culture and the office layout to maintain the flexibility of inter-functional collaboration and teamwork that drives unique product development. The culture set forth at Tinder is once of “fearless transparency and diverse voices.” Every employee at Tinder is to be accessible to one another to foster rapid information sharing and collaboration that leads to improved decision making and innovation. This is further highlighted through the open-plan office layout with moveable furniture and an environment notable for food, music, beer and wine on tap, and a ping-pong table.
Tinder focuses its operations on both maintaining the present service delivery to its users, while also planning for the future growth. This planning includes building out its internal IT system, migrating from cloud services to bare metal infrastructures, and automating certain processes. All of which is critical to continuing their rapid growth.
To attract the top talent in software engineering, hardware engineering, and data analytics for executing its critical tasks, Tinder provides the desired technical challenges and growth potential inherent in an early startup while compensating with competitive salaries and benefits. Tinder then retains the talent through providing equity to employees and fostering a strong community through daily catered lunches, yoga classes, happy hours and more.
Tinder’s performance has been quite impressive, in just three years it has become a global cultural phenomenon, operating in 196 countries with an estimated 24 million users. It is able to process 1.4 billion swipes per day, and has accumulated over 9 billion matches. The user experience remains high quality with an app rating of 4.5/5. The user base continues to growth at a rapid rate, and there are an estimated 500,000 paid subscribers which leads investors to value Tinder at over $1.3 billion (some as high as 3$ billion).