Eharmony Case Summary

Why profiled on Startup Review eHarmony established a new category within an online market that many considered to be dominated by two well-established Internet brands in Match.com and Yahoo. eHarmony was launched in August 2000 with $3M in funding and grew into a rumored $100M+ revenue, highly profitable company in less than 5 years (note: revenue currently estimated at $165M per year). By the time Sequoia Capital and TCV invested $110M into the company in November 2004, it was rumored that almost $80M of the round was used to buy out founders shares. Not bad results for a company in a market that not many VCs would have invested in during 2000/2001.

Interviews conducted: Greg Waldorf, eHarmony‟s current CEO and the company‟s founding investor. Several conversations with product management people at competing online dating services. I also spoke with online dating industry analyst Mark Brooks, who publishes a great blog called OnlinePersonalsWatch, and who I look to for all
This was somewhat counter intuitive to me, as the dating market was already well established once they entered in 2001. However, Mr. Waldorf made the point that most of the established competitors viewed eHarmony as a niche site well into 2004. Even with the radio and TV commercials, not many people believed that eHarmony was generating significant revenue in 2003 and 2004. This goes to show how out of touch some of the leading players in the online dating industry were to the needs of a particular, but large sub-segment of users. eHarmony was able to exploit the success of their model with little competition for a time period much longer than they initially anticipated. It will be interesting to see whether eHarmony can sustain its growth in the face of competition from the likes of new VCbacked entrants like PerfectMatch.com and Engage.com, and the premium offerings from Match.com and