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Monday, August 18, 2008

Spending little money in the initial stages key to startup success

I have been told I have weird taste in men. For instance, even though these guys aren't typical "hunks" I find attractive the following: Jeff Goldblum, Howie Mandel, and Eric Clapton. Are my tastes that out of line? Not really, I found out years ago after spending a few hours rating pictures on the website Hot or Not.

Hot or not has been around for eight years, so most people have probably already heard about it, but in case you have been in a closet, it's a site where anyone can upload their picture, and anyone can log in and rate them on a scale from one to ten how good looking they are. Once you have given your rating, you are sent to the next picture and the voting results for the prior picture. You can also send a shout to someone you find attractive and get to know them a little better.

The site was started by two guys James Hong and Jim Young, who literally ran the site out of their living room for four years. The friends came up with the idea over a disagreement they had over whether someone they saw was attractive. They launched the site by sending an email to forty of their friends and on that first day, the news spread like wildfire and there were over 40,000 unique visitors that first day.

Within just eight days they had over 2 million page views.

To keep up with rising costs, they added a matchmaking feature, where users pay to meet up with people. This is currently the site’s largest form of income, which is estimated to be $5 million/year. The conversion rate of free to paying users is 15%, supposedly higher than other dating sites. Additionally, the site is one of the first to sell “virtual real estate”. You can buy virtual flowers for the person you are interested in pursuing for $2-10.

Hong has given speeches to entrepreneurs, and he emphasizes the importance of spending very little money in the initial stages of startup.

The friends sold the site this year for a rumored $20 million.

2 comments:

Theresa said...

Well, now I can admit I have always had a crush on Philip Seymour Hoffman. He's the bomb.

Mommy Meryl said...

Ok - I'm glad we will never compete for the same guys. ..I think Rob Lowe is my fave and I love him even more with Brothers & Sisters. I always had the hots for Jimmy Smits too and I have to say, Carrie Bradshaw made me fall in love with Mr. Big too!! What a brilliant idea for a website though!!