In a nation full of singles and no bars, play the matchmaker. This is the thesis behind our latest Dada pick, Jiayuan.com
How to silence your mother
What was so attractive about Jiayuan's business was that it made intuitive sense that there would be heavy demand for its services. Chinese parenting sensibilities encourage a strict focus on education and grades up until the moment the child graduates from college, at which point the goal immediately shifts to getting married and producing grandchildren for the anxious family. When a 26-year-old woman is considered "over the hill," there's not a lot of room for error when it comes to finding Mr. Right. At the same time, it's actually very difficult for young people in urban China to meet potential candidates to bring home to the family. There is no thriving bar culture, and social activities typically consist of going out with groups of existing friends and hanging out with said existing friends for the duration of the night -- not meeting new people.
For a digitally immersed culture, online dating makes so much sense.
Matchmaking in the 21st century
And no company captures this trend as well as Jiayuan, whose website name is searched 25 times more often than "dating" on Baidu! Not surprisingly, the company currently captures 44% of all online dating spending in China. The business model is well-tailored to its audience, with a focus on microtransactions -- charging for messaging or "poking" other profiles -- rather than on subscriptions, which the Chinese are notoriously averse to. Each message costs 2 renminbi, paid for by virtual stamp books that users can purchase.
With nearly 900,000 active paying accounts right now, Jiayuan still has room to go in a country with 242 million individuals between the ages of 20 and 34. Plus, there's still a lot of low-hanging fruit. When the Global Gains team and I sat down with the company's young CFO, Shang Koo, we brought up the idea of virtual goods that would integrate nicely into their current microtransaction business model -- think digital bouquets and teddy bears. Shang said these were already in the works and would go far toward increasing their average revenue per user at a fairly low cost to them.
Perhaps the most attractive aspect of the Jiayuan story is that the founder, and many of the company's employees (including Shang himself), are users of the website. In fact, the founder was a graduate student at Fudan University when she started the site to help herself find a husband -- which, by the way, she eventually did. Her story and that of many others are prominently displayed on the website and underscore a keen understanding of just exactly what their users are looking for -- a market insight that should keep the company intelligently moving forward for many years.
Let's make a match!
Jiayuan has flown under the radar ever since it came onto the market right after the heavily anticipated IPO of fellow Chinese social media site Renren