JDate IP Oh Oh!

IPOh Oh ...Haaretz reports that MatchNet , the operator of JDate, is planning an IPO on NASDAQ in which it hopes to raise $100 million. MatchNet is currently traded on the Frankfurt bourse where it has a market value of over $182 million. The cool thing about going public is that the SEC requires that your prospectus divulge all kinds of juicy information.

For instance, the prospectus states that MatchNet, which runs 11 dating sites, including JDate and JCupid, has 9.8 million active members. The prospectus also specifies that MatchNet posted revenues of $30.9 million in the first half of 2004, double its income in the same period last year. Despite this, MatchNet posted a net loss of $7.1 million in that same period. Given this loss, is the timing of the IPO reflective of cash flow problems? Nah, MatchNet is probably trying to ride on the hype created by the upcoming Google IPO and the resulting mini-dot.com revival.

Now I’m no math wiz, but the prospectus states that MatchNet’s average membership fee is between $24.95 and $34.95. Let’s assume an average monthly fee per member of say $15 in order to take into account cheaper multi-month membership plans. That having been said, my quick calculations show that out of MatchNet’s 9.8 million “active” members, only 343,333 are actual paying members. JDate claims to have over 500,000 members. Using my previous calculations, I can deduce that JDate effectively has only about 17,500 paying members. And that’s just the beginning.

What this means, is that given current JDate rules that only allow paying members to reply to messages, if you buy a membership on JDate, only 3.5% of the people you send messages to will be able to reply or acknowledge your message in any way. See, JDate gives you no indication whether or not a profile you are interested in belongs to a paying member capable of replying. That kind of sucks. Imagine sending out 100 messages to 100 “active” members and only 3 (and a half) of them are capable of replying, let alone willing to reply!

I hope that brings some comfort to all you frustrated JDaters. You’re not a loser! Your beloved is simply incapable of replying to your beautifully crafted message extolling the wonder of moonlit walks along the beach, or whatever lame-ass thing you wrote.

How about Joe Shapira? He’s the founder of JDate / MatchNet, the co-chairman of the board and owner of 20% of the company. The MatchNet site tells us that Shapira is a graduate of the “Ort Singlavosky Institution of Technology in Tel Aviv” – I am assuming this is a misspelling and that they meant the ORT Syngalowski or ORT Singalovsky. In any case, it is an Institution of Technology right? Kind of like what, the Massachusetts Institution of Technology, or MIT in the US? Sounds pretty impressive until you go to the ORT Web site and realize that Singalovsky is in fact, a high school.

Also listed in Matchnet’s profile of Shapira is his experience as co-founder, director and officer of Matrix Video Duplication Corporation, a publicly listed company on the Tel Aviv Stock Exchange. Matrix , founded by Shapira in California, was involved in some pretty funny stuff. For instance in 1992 Matrix sold some video tapes that ended up being used by Scholastic Inc. These tapes contained recordings of a children’s television special called “The Best Christmas Pageant Ever” and was offered for sale to schools, churches etc. The problem was that these were recycled tapes returned to Matrix by Cinderella Distributors Inc., a distributor of porn flicks. Thus when the little kiddies finished watching “The Best Christmas Pageant Ever” they got a little unanticipated bonus footage!

With respect to Matrix, Haaretz also reported the following:

Prior to his success in the dating game, Shapira was known in Israel mainly for a major fiasco. In 1987, he founded Matrix, a video duplication company, in California, and in 1994, he started an Israeli branch, Videomatrix, along with Carmel and the Israeli firm Dovrat Shrem. Videomatrix held an IPO on the Tel Aviv Stock Exchange later that year, raising NIS 15.6 million, but 18 months later, the share had fallen 77 percent. Then, news broke that the California company was under investigation for allegedly falsifying reports, and the suspicions soon spread to include the Israeli firm. Videomatrix ultimately had to sell all its assets and become a shell company.

This was a brave move, given the amount of advertising JDate does on the Haaretz Web site. Jdate also advertises heavily on the Jerusalem Post Web site and it is interesting to note that their story on the JDate IPO was not quite as, uh… revealing.

So I guess I can assume that JDate will NEVER advertise on Jewlicious? Dang yo. Integrity sucks.

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