So how about a post mortem on the failed MatchNet / JDate IPO? See the cool thing about that whole debacle is that in their preliminary filings with the Securities and Exchange Commission (SEC) for an IPO, much information was made public, giving us an unprecedented inside look into the workings of a veritable Jewish institution.
So why was the IPO withdrawn? I mean the industry itself is due for some massive growth – according to Jupiter Research, online dating is expected to grow by 60% into a $642 million industry by 2008. Also, according to the Online Publishers Association, online dating was the No. 1 segment of content purchased online this year, growing 49% to $450 million. Had the MatchNet IPO gone through, it would have been the only public company in the industry and may have allowed investors the opportunity to participate in this dynamic market segment.
And yet the IPO failed. In it’s disclosure MatchNet revealed large and growing losses ($10.9 million), decreasing revenue per client (down 17%) and an increase in the subscriber churn rate. The losses were attributable mostly to the 233% increase in marketing costs and increased competition. One of the main raisons d’etre for the IPO was to raise more money for marketing.
MatchNet was anticipating going public for monhs, if not for years. They were planning an IPO in a post-dotcom crash market where there exists much competition from both other dating sites and from wildly popular free social networking entities (like friendster.com). Any potential investor would be and ought to be cautious about investing in such a venture. One would want to make sure that management was spending money wisely and in a sober and well thought out manner.
Both co-chaimen of the board gave themselves a 265% bonus increase in 2003 – that’s $1.4 million each. This kind of information would give any conservative investor pause. I mean they lost money that year. They were planning an IPO – they ought to have been acting with restraint. One would have to wonder what kind of bonuses they would give themselves once the company was fattenned with IPO cash. The bonus was just a numbskull move that may very well have cost them big time. They may still do an IPO in the future but next time around, even stupid ol’ non-MBA me would advise them, “don’t come off looking like such chazers!”