OPW - July 19 - We’re very honored to offer you this interview from the CEO and Founder of JiaYuan. The top dating site in China. Here’s our interview with Rose Gong Haiyan. JiaYuan is the top Internet Dating site in China, and IPO’d in May 2011. See all news on JiaYuan. See latest stock price and trending. - Mark Brooks
What’s your founding story?
I founded Jiayuan in October 2003, when I was in the second year of my Master’s program at Fudan University. Since I was already an “older” single woman at the time, I registered for several dating sites and I was frustrated with the whole process. I was receiving correspondence from both single and married men.
Additionally, I signed up for a dating site that was hosted by a match-making agency. The site featured images and profiles for lots of male members, many of whom were attractive and appealing to me as a girl who was “looking for love.” I paid RMB500 for join this site so I could contact them. I sent out 12 emails to different men but nobody responded to me. One of the men had a mobile phone number on his profile, so I was brave enough to call him to ask whether he had received my emails. The man was shocked, and said he had never registered on the dating site. That is how I discovered that most of the profiles on this site were fake.
I saw there was a real need for a serious, quality marriage/dating site, and this gave me the confidence I needed to create that site, for me, and people like me, to find their life partner.
At the time, there were already several hundred dating sites in China. There were no big funds (private equity or venture capital) paying attention to this field. Many people set up dating sites simply because they had a little extra money, and were interested in the Internet. Most people in this arena didn’t really understand online dating or social networking. Many of these sites were just imitating and copying each other, with little or no creativity or innovation.
Although I had been an Internet user for several years, I didn’t know anything about the technology. So I began to work with some friends who had studied computers. I applied for a domain name, and spent RMB300 to rent a server with 100MG space. Then I used Frontpage to learn to design web pages. After three weeks, on March 8, 2003, the first version of Jiayuan was officially live. Two months later, I ran out of money after spending RMB17600 to purchase a new server. So I borrowed RMB100,000 from an internet friend in Yiwu, Zhejiang, in return for quite a few stocks. Today, my friend has earned over 1000 times return on his investment.
The first 1000+ members were primarily family and friends. It was very difficult. Fortunately, after several months, the site began to draw attention from the mainstream media in China. At the same time, I also met my husband on the site. Soon, we received investment from Qian Yongqiang, the founder of New Oriental Education (NYSE: EDU). And we received VC investment in 2007.
In 2006 we partnered with the MSN China, and in 2007 with SINA. Then, in 2008 we partnered with TV dating programs. We had 1 Million users in the first 3 years and now we just grew ~1 Million users in 20 days. We now have over 40 Million registered users.
Congratulations on your successful IPO. You raised $74 Million in the IPO. How will you invest it?
We will invest the IPO proceeds in new business, such as mobile dating and new markets . New markets such as the second, third and fourth tier cities in China. China has 253 cities with populations over 500,000, and our current coverage is not enough.
Do you have any plan for acquiring or working with other websites?
My attitude is to go with the flow. If we have good acquisition targets, we will consider them.
Do you think other Chinese dating sites may seek IPOs in the next year? How is the financing environment (both public and private) in China for the online dating industry?
I believe the no. 2 and no. 3 dating sites [Zhenai and Baihe (then 51Taonan)] in China also want to go public. Whether they will be successful or not depends on their operating results, their sustainability and the overall market environment. At present, we account for 76% of the market share in terms of time spent, and 44% of the market share in terms of revenue according to iResearch, far ahead of our other competitors.
How do you see the competitive landscape changing in the next 1-2 years? What do you think will be the most important changes for the industry in general in the next 2 years?
I think because Jiayuan successfully went public, there will be more capital entering into this field, and the competition will become more fierce. In the future, many small sites will have to exit the market, while the large ones will become even larger and stronger, and form a benign circle. The current competitive advantages of Jiayuan are: more users, more effective, less expensive (or free). During this time we have also built certain barriers to entry, including brand, reputation, user network, user experience, capital, and many years of experience in studying the psychology and experiences of Internet dating users. All these barriers to entry will take time for newcomers or other competitors to break through.
Your revenue model is focused on microtransactions -- charging for messaging or "poking" other profiles -- rather than on subscriptions. How do you expect the revenue model to evolve in the next 2-3 years?
Our pricing model is a result-based model. It is fair and reasonable, and very successful. It also has plenty of room for growth. The shortfall of this model is that people who don’t have good (or any) results, will not pay and don’t have to pay. We are designing new models to complement or improve the current model.
Your online services accounted for 83% of the net revenue in the first quarter, and events and VIP services accounted for 15% of revenue. Do you expect the breakdown to change in the next year?
I think the ratio will remain the same. Although our VIP services business grows very fast. Dating events are restricted by such factors as time (only holidays or weekends) and weather (fewer people will attend if it is raining). Therefore this ratio won’t change too much in the future.
Any successful experiences to share with aspiring entrepreneurs?
I think that the most important thing to remember when you host a website, is to truly create value for users, rather than focusing on making money at the beginning. When the users really need your products and services, making money becomes easy.