Why should Facebook enter the dating market and how would you execute it?

Why should Facebook enter the dating market and how would you execute it?

Clarification: Dating apps are very popular these days. There are focused on a specific type of networking / connecting experience with people wanting to establish relationships. While Facebook is meant to connect people, people on Facebook are not expecting to be contacted with dating requests. Such requests need proper context and show of explicit interest from both sides to make sense. 

Strategic Question: Given that dating apps are attracting millions of users who are also on Facebook, and a lot of the functionality needed for dating exists on Facebook, Facebook is in a good spot to build should it want to. 

First, why should Facebook enter the dating app market? The possible reasons could be any of the following:

- Facebook sees this audience as a sizeable audience, wants to retain these users in Facebook. 

- Facebook is not able to reach this audience today, there is poor engagement from these user base and demographics heavily into dating apps. This could be a way of offering them a reason to stay more engaged in Facebook overall. 

- Facebook sees this audience as highly engaged, resulting in substantial advertising opportunity if a new experience is offered to them. The new experience might be more amenable to either new types of advertising that could be mis-aligned to the current Facebook experiences

- Facebook sees this as opportunity to create a completely new revenue stream to leverage its people graph to offer new types of products and monetize them differently from advertising such as monthly subscriptions. Dating could be one, recruiting could be another, etc.

- Facebook sees this as a threat to its user base as it is one of the core social activities of an important segment of users, and not being able to play a part in that, reduces the importance / value of Facebook in their lives. 

Let us look at each of the reasons a bit closer:

Impact on revenue: assuming that Facebook can create a compelling product which captures 50% market share in 5 years time, we can evaluate what that might mean in terms of revenue, Let us assess opportunity in US. Let us assume that the majority of people between 18-30 are actively involved in figuring out their life partner and thus are potential customers. Estimating the size of this segment, that is roughly 15%-20% of the US population based on my current knowledge. That is roughly 45million users in US. Now this pales in volume to overall user base but from value perspective, the advertising revenue is disproportionately higher based on online habits and advertising rates in USA. If this segment spends the most time on dating apps, time on Facebook reduces and this might be a good reason for Facebook to recapture the attention share and thus revenue share. 

Let us project the potential revenue if we have 50 million users using a dating app. Good dating apps drive very high engagement with multiple sessions every day. Assuming that out of 50 million users, 50% are roughly looking to be in a relationship, then we have 25 millon users who might potentially login multiple times every day. Let us assume they login and spend 20 minutes every session. That is roughly comparable to Facebook time spent today. That might mean 100 pages in a mobile experience. Let us assume that 25% of these pages are amenable to a mobile ad. Ad impressions = 25m x 25 pages = 625m ad impressions per day or 18B impressions a day. For simplicity, let us find lower bound - 50 cents per 1000 impressions or 0.5x18B / 1000 = 9m a day, 270m a month or 2.5B dollar a year. 

The negative factors are:  1.Popularity of existing alternatives such as Tinder etc. 2. Potential dampening effect on Facebook developers since Facebook is entering app space 3. Potential brand impact on Facebook so that it is not seen same as adult dating site.  

The good news is that Facebook is well positioned to cross the user profile moat by building a bridge to a dating app experience connected to its Facebook experience.     

 Second, the dating app options are mostly out of Facebook family of apps. Third, if properly branded and kept at arms length, the dating experience would be seen as independant entity. 

Finally, finding the right match is a lot about knowing the person, knowing their friends, finding match in interests and creating a sense of safety and confidence. Facebook is in a unique place to provide that holistic view for people to make the right choices. 

Considering the above synergies and that this by itself is a significant revenue contribution and significant share of screen time in a sizable audience, my recommendation would be to enter the dating app market.

How to execute market entry:

Facebook could start with a simple experiment to 

- let people say privately they are open to being contacted by people

- help people find other people based on interests and hobbies

- by default, limit the people who can participate in a geographical area

Once there is mutual consent, they can carry on conversations with regular channels such as Messenger.

The goal of these experiment would be to evaluate potential market size, revenue potential and willingness to use Facebook as a dating experience. If the experiment succeeds in a few different types of locations, this could be the foundation of a more purpose built experience perhaps a standalone app experience.

Obviously, there's more than one approach to this Facebook product strategy question, but here's the framework I used in my PM interview.

Why Facebook as a dating app:

The main reasons why facebook need to enter dating market:

Huge database: 

• Huge database available to run machine learning algorithms to find suitable match. 
• This is the time when everyone is putting into machine learning as it takes 2-3 years to train the classifiers. 
• Also, the no other application can provide exact matches since those don't have the user's interest, demographics, authentic information available.

Engagement: Engagement on facebook has become a big issue these days so it needs something new  to get the users back to facebook.

Resources: Sufficient resources available with the organisation.

Market Analysis:

Privacy: User's must not know other user's facebook id so as they can keep their privacy maintained.

One date at a time: This will allow the users to give sufficient time to each other and say a 'yes' or 'no' before moving forward. 

Reasons for perfect match: Provide the information on the basis of which the users seem to be a perfect match. This will increase the trust of the users on the app.

Report bullying: The app must be able to report a person so that the person's history can be maintained (externally or internally). 

Filter offensive comments: Most of the other apps don't have this feature so if we ban spam keywords (using natural language processing techniques), it can be the USP for the product.

 Execution Strategy:

Pricing Strategy:  

Ideally there needs to be several test sets in different regions so the user's response can be tested for each pricing scheme. Still, the important factors to consider would be:

• Pricing of the other dating apps
• Product development status: Increase the product price slowly as we increase the features or as we make the app more flawless so as to keep the user's trust in the pricing vs features.
• Maintaining the break-even so as to keep the life-cycle long enough.

Product launch strategy:

• Keep testing your hypothesis, machine learning algorithms by creating small fb dating apps and showing users their perfect match and if they liked it.
• Launch product step-by-step in small regions, take sufficient feedback and then pivot the product as required.
• Get the approval of the app by online dating expert advisers so as to avoid the changes later.

The important features for a MVP could be some of the following features. We can choose the features in launching in different regions:

• Ask user's dating status: Single, ready-to-date, engaged
• Ask user's availability: 1 months, 3 months, 6 months,  1 year or so. It will help other user's to understand how long the relationship could be before making a decision if they want to take it forward.
• 2-minute video of a person about why someone should date him/ her. It will give a better chance to someone to present themselves in the most realistic and engaging manner.
• Auto-suggestions for silence-breakers: These will help people in creating a strong first impressions.
• Dating feedback of the users: It will alert other users of the nuances, keep the transparency also help the training algorithms about how to improve. It can prove to be the most important reason why to use the app. 

Creating the Road-map:

The road-map may look something like:

Research whether to engage into the market: It will include analysing if we have the team ready, what are the other options to invest into, competitor study if they're able to solve market problems, analysing if the market is worth invest into.

Pre-launch tests: Creating small surveys about the problems users face.

Develop an MVP: Deciding the features for MVP and developing the app. 

Beta testing: Launch for 1-3 months or up-to the period till we get sufficient feedback.

Pivot the product: Analyse how the market is responding to the app and whether to continue or not.

Launch into market: When sure if the app can be launched into particular regions, then launch the features step by step for a year and make the product the best version of itself.

Clarify: Is this a product design question or a product launch question? I assume it's the former. Assume this is being designed on the mobile (smartphone) app.

Goal and Mission: FB's mission is to bring the world closer together/ give people the power to build communities. Dating is a popular way for people to connect/ get into a relationship, so I believe it makes sense for FB to enter the dating market.

Users:

• "Explorer" - person searching for a date
• "Reviewer" - person who's already put themselves out there, i.e. have a full fledged profile and want to accept/reject potential dates
• Friend of the Explorer or Reviewer - provides their opinion on potential dates

I choose the Explorer and Reviewer personas given they're equally important and are the primary consumers of this product.

Pain points with dating:

1. Trust - can I trust this person? how do I tell if s/he's not in another relationship?
2. Safety - how do I know this person is not a criminal? will this person harm me if I reject him/her? 
3. Compatibility - does this person share my interests/goals/dreams?
4. Meeting up - logistical decisions about where to meet, when to meet, making a reservation, etc.

I feel #1, 2 and 3 above are the biggest pain points when it comes to dating. Also, unless these three pain points are solved, #4 doesn't come into the picture. Hence, I'd like to work towards building a solution for these three pain points.

Use Cases:

1. As an Explorer user, I want to be able to search for and view a list of potential dates
2. As a Reviewer user, I want to be notified when a potential date reaches out to me and take necessary follow on actions

Solutions:

• Introduce a new check box/ field on user profile (heart icon?) to indicate they're looking to date. On the left nav, build a new link called "Find Me A Date". Clicking on that shows you potential matches by default - algorithm looks at common interests, location, education, number of common connections, etc. User also has an option to filter results or do a custom search based on specific criteria (age, sex, location, education, work, interests, etc.).
• If I'm a Reviewer user, I get separate notifications for dates. When I get an incoming request for a date, I am presented with info from the person's timeline but curated for me, i.e. name and profile pic, common connections (plus recent comments on common connections' posts), check-ins at restaurants I like (or ones with cuisines I like), movie/music/event interests, etc. I can then accept/decline the request or flag it for viewing later. 
• FB can differentiate themselves from the competition by removing concerns around trust and safety in a couple of ways:
  • Provide the option for users to willingly subject themselves to a background check (FB will have to partner with law enforcement agencies in the backend to get access to criminal history, marriage records, etc.).
  • Provide the option for users to willingly subject themselves to a health check (FB will have to gain user's permission to access their health records to screen for STDs, etc.)
  • Users who've been vetted will be shown at the top of dating search results, special check mark will visible on their profile pic
  • Call out that this is a high cost feature - the hard part is in building partnerships with law enforcement vs. actual product implementation

Summary: Summarize everything towards the end of the interview.