What keeps adultery site Ashley Madison ticking

SOURCE:forbesindia

Noel Biderman will usually lie if a passenger on an airplane asks him what he does for a living. He’ll say he’s a lawyer, which is true. Biderman is also a successful entrepreneur who earns more than $5 million a year, but just uttering his firm’s name is enough to halt the niceties. Biderman is the co-founder and CEO of Ashley Madison, a website that facilitates extramarital romance and sex. “There are times that I have told people, and that’s the end of the conversation.”

All the attention and money that dating apps like Tinder are attracting has drawn Biderman into opening up some more about the financials at Avid Life Media, the privately held Toronto holding company that owns Ashley Madison, CougarLife and a handful of other love-connection sites. Biderman is out to prove that he can still compete in an age of free hookup apps like Tinder and OkCupid. Tinder, which has logged 600 percent growth over the past 12 months as of November, has more than 30 million registered users who collectively check out 1.5 billion prospective partners daily—that’s 17,000 per second. The app is even cannibalising revenue from its sister company Match.com (both owned by IAC). Match was up a mere 5 percent towards end-2014. Ashley Madison, in contrast, is still going strong.

Tax documents and figures shared by Biderman showed that Avid Life Media grossed $115 million for 2014, up 45 percent from the $78 million it grossed in 2013, and up nearly threefold since 2010. Pretax profits, says Biderman, will come in at $55 million, which financial analysts say is a typical margin for the industry. Worldwide, the site has had 31 million total users over its lifetime, 6.8 mil- lion of whom logged in over the previous 90 days as of late November.

Biderman appreciates Tinder as a rival and is quick to point out that Avid Life once owned and then sold HotorNot.com, a proto-Tinder site that lets you judge an endless series of people based on their looks but without the swiping or chat feature. After the Apple App Store rejected it, Biderman sold HotorNot. “Rating people was offensive; swiping them is okay,” he says. “I regret that I didn’t think of it first. Congratulations to them.”

Ashley Madison’s clients are older and more prosperous than Tinder’s and not exactly eager to broadcast their moves. “Forty- to 50-year-old married men are not going to log into an account on Facebook,” he says.

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