Sam Yagan: OkCupid
OkCupid is the fastest growing online dating site. The company employs a math-based matching system. Why? Because the founders were all Harvard math students. All four of them. This is CEO and co-founder Sam Yagan’s third venture. Sam has been building businesses since his senior year of college in 1999.
Sam is well known to the entrepreneurial world, having founded his first company, SparkNotes, with three friends in college. SparkNotes became the leading brand of study guides and now surpasses CliffsNotes. The company started in Sam’s dorm room and he built it for three years and then moved on when Barnes & Noble bought it in 2001. Actually, Sam had to sell SparkNotes twice because the first company that bought it went out of business. “And they paid too much for it,” Sam added, with a smile.
Sam’s second enterprise was pretty well known too – eDonkey, which, at the time, became the world’s leading video sharing site. Sam grew eDonkey to 30M users worldwide, the largest video network in the world. “eDonkey was the next generation of Napster,” Sam explained. “We were very high profile because the music and movie industry were trying to figure out what they are doing,” Sam added. Unfortunately, Sam and his company were sued by the recording industry for $1B. Ruefully, Sam described the end in 2005, “Not having the billion handy, we shut it down. While we were the more legal version of what they were doing, we were only slightly more legal.” Sam ended up testifying before the senate judiciary committee.
In 2003, Sam had enrolled in business school to get an MBA. As he explained the logic, “After the SparkNotes experience I was struggling with whether I should go to grad school. Do I need an MBA? And does it make sense to spend two years out of industry? Cooped up in a school? But with eDonkey I could stay on the forefront of tech, do all the business development, and still get an MBA from a great school.” Sam graduated from Stanford, first in his class.
While in school in 2004, Sam saw the writing on the wall of eDonkey. As he told it, “So we started concocting OkCupid, which in January, 2011 won the industry version of the Academy Awards for best dating site. Sam proudly stated, “We won every category that we were entered in, including best dating site. Match.com is probably still the biggest and we are making a big push there.”
Sam built OkCupid by reinventing the category and the price points. Sam explained his perspective on the opportunity for a new online dating site, “I think about competition along three axes: cost, quality and fun. The internet used to be only the first two. What has the democratization of the web, web 2.0, etc., what has that done in terms of a scalable generalizable structure? It has now made it fun, crowdsourcing, a differentiating factor. That enables more social, more fun, elements. When you look at those three, look at eHarmony. Their price was high at $60 per month, and we were $0. We think our product works better than theirs – you are more likely to find a better mate than on their site. We don’t believe that their matching algorithm works. They don’t even have an algorithm! Fun… our first slogan, was for free, fun, and effective, the three fs. Dating should be more like going to a bar than a shrink. We compete on those three axes.”
Obviously Sam believes that to be successful you need to be able to compete on all three of the axes. Too often entrepreneurs only compete on one or two of those axes. But, he admonished, “All three changes the game, defines disruption. You have all three; then you leave the incumbent with no advantage.”
From SparkNotes to eDonkey, how did Sam and his brilliant, restless mind settle on the dating world? He answered, “We were looking for an industry that had that angle. We had to find something that people were charging for, but where we could develop a vision for a better product. Dating didn’t have a dominant free player. That said to me that the industry was ripe for improvements.”
Sam’s OkCupid team is the same as the SparkNotes team. They were college buddies from Harvard. As he told it, “Chris [Chris Coyne, President] was my roommate for all four years, and Max [Max Krohn, CTO] lived across the hall from us. They were the two smartest people I have ever met.” Christian Rudder, the company’s Editorial Director was their first hire. Today, their desks are still attached to each other. They attend each others’ weddings and are close personal friends. Sam acknowledged, “We are the exception. I know…”
As four Harvard math majors, the partners look identical. As Sam succinctly described this, “We all have a common base; we view the world the same way; all of our arguments come from a common ground. You should see our arguments and discussions. We argue in a highly analytical way. There are no emotions, no feelings.” Max, the technical genius behind OkCupid, got a PhD in Computer Science from MIT. Chris brings product experience. Christian is a writer and provides the creative energy to write the company’s blog. Ok, maybe each of these team members is the same, but what makes this team special are the differences. “We are all about execution. I can leave Max to everything. I defer all decisions to him. I don’t lose a minute of sleep, and they don’t even read the documents I make them sign. I have 100% trust in them; they have that level of trust with me, and that level of trust with expertise is amazing,” Sam summarized.
OkCupid raised $6M from investors in 2006. Today, the company is wildly successful. At 17 employees, the company is growing like crazy. It’s very profitable. And it’s a media darling. It’s written up all the time – the NY Times, Huffington Post, Time Magazine, you name it (http://www.okcupid.com/press/news). The company has been featured on the Today’s Show, Rachel Ray, and other programs, and has made it into general the public conversation.
Sam is all about disrupting the industry. And having fun. As he put it, “Our bias is to do what we want to do and keep going. The only thing that can keep us apart is life and logistics but we will keep working together because that’s what we want to do.” The return on entrepreneurship? Sam completed his thoughts, “Fun. That’s the return on entrepreneurship. We don’t’ get paid enough. It’s fun. And that’s what I want to be my legacy.” Go for it, Sam. We applaud you!