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Grindr Goes Beyond Dating

Motley Fool - Tue Apr 16, 3:55PM CDT

George Arison is the CEO of Grindr, a social networking app for gay, bi, trans, and queer people. Motley Fool host Dylan Lewis caught up with Arison for a conversation about:

  • Grindr's growth story.
  • Looking beyond dating for platform engagement.
  • What companies can lose in a remote-only environment.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

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This video was recorded on April 07, 2024.

George Arison: Grindr has this very unique approach of a grid. Let's say you come to Grindr and the first thing you see is a grid of people around you, if you're a free user, you see 100 people. If you are a paying user use 500, an unlimited number of people depending on which to you subscribe to. But that's the core thing and it's a very open architecture style. You can message anybody on the grid. There's no limitations, there's no kind of matching that happens between people before you can communicate. That's worked really well for Grindr. That's why Grindr is as good of a product as it is. We don't want to change that at all, but we do want to extend on that.

Mary Long: I'm Mary Long and that's George Arison, CEO of Grindr, the dating social media and entertainment app for the LGBTQ+ community. My colleague, Dylan Lewis caught up with Arison for a conversation about how to build a dating product that keeps users for the long haul even after they found their person. They also discussed Grindr's similarities to Uber, prioritizing product development and the difficulties of building a culture in a remote first environment.

Dylan Lewis: As I look out and a lot of our listeners look out on the dating and social meet up market, we tend to focus on the publicly traded names. In that space, it is Match, Bumble. Really you guys for the major players, how do you look out at the competitive landscape and how you're positioned?

George Arison: Finally. We are a little bit of a unique product of those companies because we have a very different target audience. Grindr is primarily used by gay and by men as a way to connect. Then secondly, the way we use is also very different. Yes, casual dating and long-term dating, obviously, the primary reason people own Grindr, but when you do a survey of what do you use the product for, they give you a really broad list of things actually. Friendships isn't really big. Second tier friendships isn't even bigger. These are people you might go out and party with, but not necessarily meet up all the time. Then people also use Grindr for travel and local discovering. I'm traveling to say Mexico City, what should I do when I'm they're chatting with people in Mexico to try to understand what your options are or what's happening in New York today? I'm in New York, but I just don't know what's going on. What should I do? That's a big part of the US states as well. Then beyond that, networking, health information, etc, is also used in the product. Because we use it in such different ways and in such a broad range of ways, people's connection to Grindr is very different as well. We tend to like to say that we are the gayborhood on your phone, meaning people in real life move into in-real-life neighborhoods oftentimes when they're off to college or when they turn 18 as a way to figure out who they are, what their life we would like as a gay person, etc. Not everyone has an opportunity to do that. With Grindr, we actually enable you to have that same relationship with people but on your mobile phone. Because this connection with a user base is so different because people spend so much more time in the app than in other products, they're in it for an hour a day. I think our understanding of the user base is very different than our peers and on the straight side. Although of course, it's also true that in the world people use more than one product for dating. We know that our users will also be using other products like Tinder, or Hinge for dating as well.

Dylan Lewis: I saw that "our statistics" cited in your investor deck, and when you cite it, you also look at comps from the world of social media, Meta properties like Facebook and Instagram. But you're also looking at monthly subscription spend as a comp, looking at places like Netflix and Spotify. It seems like in trying to understand your business, it is a hybrid of dating, social, and entertainment. Is that the right way to be thinking about it?

George Arison: That's 100% right way of thinking about it. It's used for all those different ways. For dating alone, you wouldn't be spending an hour and the product. But for all the connections that Grindr offers you, obviously, that makes a lot more sense. I tend to use this term, window shopping, which is in effect entertainment that people are doing in Grindr as well. Look, I mean, it's like when I finished college in 2000, I moved to DC with a very clear view like, hey, I want to be around where there are a lot of gay people because I was still trying to figure out I'm I OK or not? I'm I going to come out, etc. Then I like very actively moved myself into Logan Circle. There's a little bit of that happening on Grindr with users. That's why I think people have we've been so successful at keeping the younger generations coming back to the product. Whereas Facebook lost a lot of people to Instagram. Instagram lost people with Snapchat, etc. We've never had that issue in 15 years that Grindr's been on.

Dylan Lewis: I'm curious, so much of the associations with the brand are in the world of dating and casual hookups and you clearly have ambitions for the business beyond that, what is expansion look like for you guys?

George Arison: We tend to think of it as an extension of the product rather than a change. The things we do really well, we want to keep. Grindr has this very unique approach of a grid. Let's say you come to Grindr and the first thing you see is a grid of people around you. If you're a free user, you see 100 people. If you are a paying user, you see either 500 unlimited number of people depending on which team you subscribe to. But that's the core thing and it's a very open architecture style. You can message anybody on the grid. There's no limitations, there's no matching that happens between people before you can communicate. That's worked really well for Grindr. That's why Grindr's as good of a product as it is. We don't want to change that at all, but we do want to extend on that. I tend to compare us in that regard to something like an Uber. Uber started out with Black Cars as the primary product then it added UberX. That's all they did was black cars, UberX. But then over time, they built a separate app for food delivering, or restaurant delivery and initially was a big -- this is going to be for food and versus this is for Uber, the car. But they found that actually, you know, it's better if they extend the main product with a button to start doing restaurant delivery in the product. That's worked really well for them. It changes the app feel when you go into a restaurant ordering, but it's still the same product overall. Then since then they've obviously added delivery of parcels, delivery of groceries, etc, is all coming into the product as well. We tend to think of us in the same way. We are primarily for dating and for casual hookups today. That's what people use us for primarily, but they also use in all these other ways that I spoke about a few minutes ago. That all happens organically without us building features for that, Grindr hasn't built features for networking or for health information or for travel. Over the next couple of years, we want to build feature sets in these areas. We'll obviously start slow, like we'll do one feature and then add more and ultimately extend into these other areas while keeping the core of the product the way it is we think users it will respond really well to that. Our general approach to product development is very user-focused. Really understand what users want and then build those things. We're lucky because people are already using the product this way. We're just giving them what they already are doing in a better way versus trying to get their behavior to change.

Dylan Lewis: I'm glad you broke down the grid interface there because I think for folks unfamiliar with the app it is a departure. It's a little bit different than what people expect with the swiping, dating app interaction. You talked earlier about growth with respect to product development and use cases within the app. One of the other natural places that my mind goes when we're thinking about growth is just continuing to expand into the total addressable market that you guys have identified. You currently have 13 million monthly actives, just under 1 million paying users. You have a pretty sizable total addressable market in your investor decks. What helps you capture more of that market?

George Arison: There's a bunch of things happening on that, we're obviously more penetrated versus TAM in the US and then in Europe because we've been there for much longer than our places and for a few reasons, I'll get to in a second as well. But Grindr is in 190 countries. It's pretty ubiquitous. They're very few places where we're not the Number 1 product. In most places where the number 1 product that people use, although it varies based on specific country, where we versus our competitors in those specific countries. One of the things that's happening in the world is that being gay or being bi, is becoming a lot more accepted in a lot of places. Who would have thought that in India where less than a decade ago it was illegal to be gay, now they talk about gay marriage? Now it hasn't happened yet. But the fact that this conversation is actively happenings already a massive change in that country versus 10, 15 years ago, or that in Thailand you'd have a majority of members of parliament and be in a place where there would be voting for marriage of Bonnie. The world is changing in a very positive way in a lot of countries. Not to understate the fact that there's still 60 countries which actually illegal to be yourself if you're gay so doesn't that have a challenge as well. But the societal changes really help us because it's easier for people to be out, which means that it's easier for them to be on Grindr. I think we will continue to see a lot of growth internationally with the societal changes. Latin America has been really great place for us, Asia's coming up as well.

That's one set of places where I think we will see a lot of growth from our perspective. But even in the places where we are a lot more ubiquitous, like in North America and Europe, we still have a ton of room in terms of growth from that MAU versus TAM perspective and so we still can capture a lot of users. Things we need to be doing well is continuing to get people to come into Grindr as they turn adults, 18 or post-college at 22 to be using our product. We need to be always thinking about what do younger users and that 18 plus range want. I am going to underline the 18-plus because we don't allow anybody under 18 to use Grindr. That's a zero-tolerance rule for us. When I say younger, that's referring to 18 plus. Then secondly, with some of our more older users, 35 and older, they do want these dating features. They want to settle down and want to have that option and find a long-term partner. Building those features I think will really help getting those users to be very engaged as well. We do have a lot of opportunity to grow our MAU a lot more. It's not something we are worried about. The really remarkable thing is that we do that with very little marketing. Grindr spent virtually no money on marketing last year. We will spend more money on marketing this year, but it's still going to be a very small percentage of our revenue. None of it is performance-driven marketing. It's all social content creation to drive engagement with the product and our social channels. Not at all to specifically acquire users. Because we just don't need to. We're very lucky that Grindr hasn't very high name identification and it's actually unaided, the number is 85% plus. Then additionally, people know that this is where the community isn't, so they can come back to it for that reason. We're fortunate that we don't have to spend money on marketing, which actually creates a lot of leverage in our financials service as well.

Dylan Lewis: You mentioned that next generation of users and the new users that will continue to fuel the growth. I'm curious there's been so much ink spilled on the differences between millennials and Gen Z. Feel like we see surveys, we see headlines all the time. As you look generation to generation, I'm firmly in the millennial market. I'm also trying to understand the Gen Z consumer a little bit. Is there anything interesting you're seeing there?

George Arison: Well, I think for, when I went back to Grindr as a product, after they started to talk to me about this job, I had used it a lot in the past. Some of my closest friends, I met on Grindr but wasn't using the product heavily since I got married. One of the things that was really interesting is how many more people were willing to openly say that they are bi. If you go back to 20 years ago, that was not as common. That is definitely one thing that's changing with the younger generation is that they are much more comfortable editing themselves as bi. That's one of the vectors in which you are seeing growth in that LGBTQ percentage is people who say yes, I'm bi and I'm actually happy to say that I am that's something that we are definitely noticing. I think in other products. The youngest cohort, that Gen Z cohort 18-25, right now, maybe even 22 is somewhat different. We are not noticing that behavior to be that different inside Grindr versus before. So they're still coming back into the product that's still engaging with users quite a bit. So none of that is an issue for us, I think it might be more of an issue for our straight peers. But what we do notice is that whereas historically based on data, just publicly available data, average age for gay men to get married is about 38. I think with the 18-25 range of users, that number is going to happen earlier. They're not yet getting married. But they're definitely thinking about that topic sooner than their previous generations were. Which is another reason why investing into dating features and getting them out into the product makes a ton of sense because that's going to be something that matters not just for older users, but for this 18-25 cohort also.

Dylan Lewis: Is that build-out in terms of features and functionality, may be partially motivated by wanting to continue to have a long-term relationship with the users that you bring on the platform? I feel like when we look at Match and I say this as a Match shareholder, it's interesting because if they're successful in what they do, they stop becoming a user and that's a tough dynamic.

George Arison: We don't have that dynamic as much. People continue using Grindr even after they meet somebody. That's just a different part of frankly gay culture, so how people use our products on both sides. But yes, we obviously want to have that long-term relationship with users. I think frankly, there's a lot of good that comes out of that relationship. When in 2022, monkey pox became a real problem as an epidemic. Grindr played a really crucial role in educating the users that, hey, you should go get a vaccine. Here are the places we can get a vaccine. We work with a non-profitable, the widget to find a way you could find a vaccine availability. Over two million people in Grindr looked up where to get her vaccine through that widget, which had a really massively impactful positive on getting that epidemic under control. That long-term relationship really has a lot of awesome benefits and for the business obviously, but for the user as well and so we do want to maintain that for sure. Frankly, our user base is only a small percentage of the world population. You want to be around people who are like you in some ways and so having Grindr there for you is very valuable and we definitely want to continue to nurture that.

Dylan Lewis: You joined Grindr as CEO in 2022. What made the role interesting to you?

George Arison: I'm a company builder. I built three companies from scratch. I built my first company, starting in 2007 when the idea of building a mobile app was completely foreign people, we put apps on BlackBerrys. When I said that to people they're like, you put an app on a BlackBerry, I didn't know you could do that. Then obviously we then put the same app on the iPhone and we're a big part of iPhone growing. We grew with it. That's the company called Taxi Magic. You can still use it in New York as cab. I've been in part about nearly for 20 years and I think that's what I love to do. Never thought that I would go run somebody else's company after running three of my own companies. But what made the Grindr so interesting is a few things. One was just the profile of this business from the financial perspective, it's just totally incredible. We have this amazing EBITDA margin in a company that's growing, that's very unusual. Most companies grow through investment dollars and the EBITDA margins are very bad in that sense, which is understandable because they are growth companies. Grindr is able to self-fund its growth while maintaining this really awesome, robust EBITDA margin over 40% last year and we gave guidance a week-and-a-half ago of 40% for this year as well. That's really powerful and really exciting, very unusual to find businesses like that. Obviously, I'm a capitalist, from that perspective, that's a really incredible. Secondly, this really unique connection to the users that Grindr has was extremely appealing as well. At the same time, you don't often see businesses that have been around for 15 years that are as mature as Grindr is from a user perspective, but have so much whites-pace from product development point of view. You almost come into a business as totally ready to be a public company from revenue growth and debt maturity perspective. But so much opportunity almost like a series B company from product development point of view. We met these two really unique things that I love. I actually like being in a public company. I took my last company public and really enjoyed being a public CEO. I think I do a good job engaging investors, etc. I love early stage part development and we have so much opportunity to build products from scratch at Grindr while maintaining this really great margins. Those things are all super appealing to me. Then overlaid on that was the fact that, I came to the United States at 14-year-old kid from the Soviet Union. I know what it's like to live in a place where being gay is really difficult. Now, it's not Saudi Arabia, Georgia is not Saudi Arabia by any means. Legally, you have most rights in Georgia as I gay person but de facto you don't. Society doesn't really accept you so I know what that's like as well. I lived in America through 25 years or more of our rights becoming much more ubiquitous. Not just our rights, but also just becoming a lot more accepted. The idea that if you had said in 1992, I'm going to be married as a gay man and have kids through surrogacy. That was completely unbelievable to most people and yet some people were adopting children as gay couples, but it was very uncommon. I've seen societal change in a pretty significant way and have enjoyed the benefits of that change in a significant way as well. To be in a business where every day you have an opportunity through being a really awesome business, have an impact on people's lives in such a positive ways, also hugely appealing. Grindr does a lot of work in public health. We help make lives of our users better through that. Then we do a lot of work abroad in encouraging activists and working with them to promote rights for our users in a lot of countries where necessary. Basically through our work, we're able to make a really massive change in making the lives of our users more free or just more equal. That's really powerful, as well as someone who's really benefited from other people's work to have that really fortunate life that I do in the United States. Having an amazing business that does so much good at the same time, pretty tough to find, which is frankly like the value prop that I tell all the potential investors there. Because there's so much good here that they should take adventure of.

Dylan Lewis: I imagine 2022 must have been an interesting time to join a business, especially as an outsider. The pandemic and the post-pandemic years have reshaped a lot of different things, especially for digital businesses. But looking at a company like yours that is so focused on how people interact with each other. In a way, it's opened things up a little bit and move people away from their immediate markets. Coming into the business in 2022, what did you learn and how has the business learned from the pandemic?

George Arison: Yeah. Well, we definitely benefited from, with the world opening back up in 2021, 2022 because 2020 was a tough year for Grindr, as for any company that has to use virtual for in real life. Now obviously people use Grindr for digital connections as well. That was working well, but in-real-life with a lot more challenging and we saw the benefits of that in 21 and to some extent in 22 as well because internationally vaccinations were behind the U.S. and so we saw the people come out later. Of course then in middle of 2020, we had the monkey pox epidemic and that was a big problem. I was not yet at Grindr, but just understanding what Grindr did and knowing what Grindr did, because I was on the board, was really powerful. It really demonstrated the power of this platform for the users. I think the other challenge post-pandemic for many, many companies Grindr included was the fact that we hired a lot of people, a lot of companies did as well. Frankly, people thought that this whole work-from-home thing could go on forever and didn't really understand and appreciate how challenging it is to build good culture inside a company in this virtual sense. Yes, virtual creates a lot of flexibility and we want to encourage the flexibility. I have two kids and I love being able to spend time with them. Eight hours of the day, would previously would not have been possible because I work from home certain days. But at the same time, building culture totally virtually is really difficult. You don't see the full person. You aren't able to engage with them in ways that you would engage them in person. Frankly, users who were also employees were saying things that were indicating this but didn't weren't putting the pin on it. I would say "I'm unaware of the things we're working on". One of these that you aren't aware of things we're working on is because you're not in the office together and are not engaging your colleagues during lunchtime or coffee breaks on what they're working on. That's a big, reasonable to deal with we're working on. For us, Epic learning was if we want to have a really high performance driven culture where we go after audacious goals and achieve them by working super hard. Where work does matter to us, like people who come to Grindr should care about their work. It's not something that you do nine to five and you're done. It was very hard to have that performance-driven culture fully virtually. We had to make a decision that we needed to come back to the office at least a couple of days a week. We had to center around specific locations where most people in that particular team will be working on, the approach of center for excellence. That was a really big change for Grindr last year because it was obvious quickly. We had to make a lot of changes and some people were OK with those changes and came along with them and some are not and are not with us. That was probably where a lot of the learnings that had to happen post-pandemic. That, yes, pandemic allowed us to create a lot more flexibility for people in their work in terms of when they work. But being in the office on certain days and being together is also really crucial at the same time.

Dylan Lewis: Did that change at all the way that you look at what you offer to your users and what's available in the app?

George Arison: Not really honestly that the things that we need to do in the product would have been true I think regardless, free pre-pandemic or proposed. But I think how we work on definitely has changed quite a bit. We're back in the office two days a week. We do a lot more teams getting together. My executive team and leadership team, more extended, just had an offsite on Tuesday and Wednesday and we tried to do that once a month now because even though we're back in the office, different executives and different offers. We need to bring it executives together to spend time together as well. That's, I think where I've noticed most of the change less on the product itself. But what I have seen is people are really engaged when they want to go after really big goals. This world where you can bring people together on certain days in the office, but give them a lot of flexibility nowadays is actually in some ways the best outcome for people and how they work, which I think results in much better product development as well.

Dylan Lewis: I know you have your company's first Investor Day in June of 2024. I always love giving our listeners a lens behind the scenes into what it, what goes into some of the corporate communication that we see from companies. What's the prepped for that looked like?

George Arison: It's a lot of work in you're like, wow, it's four days, but I'm going to spend like nine months and months preparing for it. For us, the opportunity is significant because we went public through a SPAC transaction and so didn't have the kind of normal IPO roadshow that a lot of companies do when they go public. We have spent a lot of time talking to investors since we've been public. We've met a lot of people you would meet more than once, even in months since then, but we've never had a chance to tell our story fully. For us, this is the opportunity to do that. We're going to do a pretty deep, deep dive into the business from really kind of three main perspective. One is the product and where we want the product ago without line a longer-term vision for the product and how we are envisioning to accomplish those things. We've talked about it at a high level, even in this call. But actually, I go down to like product levels and this is what the product would look like. We have some really cool things were going to show investors in that regard. Secondly, from the brand and storytelling point of view, Rhino has this amazing brand, but at the same time, there are some negative connotations easy with that brand. A lot of them originate and homophobia that people don't even oftentimes realize that they might have. But also historical challenges at the business might have had in terms of choices that it made that caused problems. But people still think those are true today, even though it was like years ago with two management ago etc. Telling our brand narrative and talking to people about all the awesome things that this company does for its users, I think is really important. That's a core priority for us for 2024. But even beyond that. That will be a second part of the Investor Day presentation. What's division was the mission and how do we go after it? Then thirdly, from the financial perspective, we think we're still in the early days of monetizing this product. We want to tell people where we think this will end up over the longer term and the midterm what the financial metrics might look like and really show them why we're so bullish about being able to drive monetization up, continue to grow our payer penetration while driving our MAU growth at the same time. Those are the three things we're focused on. Different teams in the company are working in each one of those and then bring all that together with me being the spokesman for a lot of that. It's a lot of work. But the good news is a lot of the work you're doing for the Investor Day is also what you have to do to run the business anyway. You have to have a long-term plan. You have to have a lot of product tied to that plan, kind of how you're going to achieve that. All the brand work that you're doing goes into the store that you're telling. It's not extraneous to the business, but it is on top of that because you need to tell the narrative and a couple of hours rather than over many, many days. We are very nimble team. Grindr ended last year with just over 100 people working here. A lot of people are doing a lot of work to make this happen, but we're really excited about, and I think I hope a lot of people come in and listen and learn about how awesome over business and product countries.

Dylan Lewis: Well, we're looking forward to the mid-summer update until then, George Arison, thank you so much for joining me on Motley Fool Money.

George Arison: Thank you. I appreciate it.

Mary Long: As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Mary Long. Thanks for listening. We'll see you tomorrow.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Dylan Lewis has positions in Match Group and Spotify Technology. Mary Long has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Match Group, Meta Platforms, Netflix, Spotify Technology, and Uber Technologies. The Motley Fool recommends BlackBerry and Bumble. The Motley Fool has a disclosure policy.

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