Last Valentine’s Day, Goldman Sachs alum Brendan Alper, 30, launched his new dating app, Hater, which matches people based on what they hate rather than what they love. Users can swipe on thousands of topics, from Kim Jong-un to ketchup on hot dogs. The app’s algorithms recommend the most compatible matches. On a segment of ABC’s hit business pitch show Shark Tank that aired November 26, Alper struck a deal with Mark Cuban. The billionaire Dallas Mavericks owner pledged to invest $200,000 in exchange for a 10% stake in the company, valuing Hater at $2 million. Just before the show taped, Alper had raised $500,000 from a venture firm called Sweet Capital, which bought a 12.5% stake, valuing the company at twice as much. Based in London and Stockholm, Sweet Capital is run by the founders of the company behind the hit mobile game Candy Crush. In this interview, which has been edited and condensed, Alper talks about his contrarian approach to dating, how tough it was to pitch to the sharks and why he sold a stake to Cuban at a bargain rate.
Susan Adams: What did you do before you started Hater?
Brendan Alper: I graduated from Brown and went straight to Goldman Sachs but I quickly realized it wasn’t the life I wanted, being a cog in the machine. Six years in, I worked up the guts to quit and decided to become a comedy writer.
Adams: How did that lead to Hater?
Alper: Very early on, one of the ideas I had for a comedy sketch was based on Hater, a dating app that matched people based on what they hated. The more I told people about it, the more they said, I would totally download that if it were a real app.
Adams: What did you do for financing?
Alper: I used my savings and cashed in my 401(k). We also raised $100,000 over the course of two years from friends and family, which was just enough to build the app.
Adams: What’s your business model?
Alper: Right now, the app is free but we’re experimenting with a few different monetization strategies. One would be to sell data. We’d go to brands like Starbucks and we could tell them that 18-year-olds in the Northeast region who love Starbucks also love coconut milk and they also love a particular kind of music. The other strategy is the more traditional dating app approach of charging for premium subscriptions.
Adams: Are any companies paying you for data?
Alper: We have a couple of deals in the works.
Adams: Might users balk at being asked about specific brands?
Alper: There are a lot of questions about brands in the app already already. There are 4,000 topics. They range from politics, like Trump and Kim Jong-un, to questions about Starbucks, Ford and United Airlines.
Adams: No one is going to answer 4,000 questions.
Alper: We can sort the order. People typically answer a few hundred each. We can promote certain ones at the top.
Adams: How did you publicize your launch?
Alper: We were basically out of money but very early on I knew the only way we were going to survive in a crowded space was to make a giant splash. Sam Terris, head of PR, was my first hire. He was a publicist at Random House and my friend’s little brother. We created a viral pitch, timed for Valentine’s Day 2017. That shot us out of the gun.
Adams: You were criticized for a billboard in New York City showing Putin caressing a pregnant Donald Trump.
Alper: We did that on Valentine’s Day as well. It was a projection, not a billboard. A friend runs a projection company. It cost $1,000.
Adams: How did your appearance on Shark Tank come about?
Alper: They reached out to us.
Adams: What was the most challenging part about applying?
Alper: The whole application process is very difficult and lengthy. They don’t want us to talk about the different steps they require you to take but you have to provide information, and pass tests at various rounds to proceed to the next stage.
Adams: What did they tell you about whether your segment would air?
Alper: That’s the hardest part psychologically. You don’t know through the entire process whether you’re going to make it.
Adams: What was the taping like?
Alper: Very stressful. Being abruptly put in front of all the sharks and being asked to perform is hard. We rehearsed the pitch 100 times. But you don’t know what they’re going to ask. None of that is scripted.
Adams: Which of their questions were toughest to answer?
Alper: How are you going to make money and what are you going to do about growth? Why should we invest in you based on your relatively small number of users compared to other apps? We have 750,000 users worldwide.
Adams: I can see why the sharks would be skeptical, when Match.com has 21 million users. How can you compete?
Alper: Our app isn’t just for dating. It’s for meeting in a social capacity. We can’t compete purely from a numbers perspective.
Adams: Why did you do a deal with Mark Cuban when other sharks were offering you more money? Barbara Corcoran wanted to give you $250,000 for a 5% stake, which would have given you a much higher valuation.
Alper: To be honest, the one thing we didn’t really prepare for was picking a shark. It’s a strange thing to have to make a decision in 10 seconds. Also we’d just closed a $500,000 investment from another investor so the money didn’t matter so much to us.
Adams: But your other deal valued the company at twice the amount Mark Cuban’s offer did. Why dilute the value of your company so much?
Alper: There are a lot of unique benefits that come from working with the right person that can offset the dilution from a relatively small investment. I thought Mark’s name and his celebrity would help get the word out about Hater. Also I also don’t believe that a Shark Tank valuation represents our true valuation.
Adams: How did your other investors react to you selling a stake to Mark Cuban for half of what they paid?
Alper: No investor likes to see that happen but they understood the context.
Adams: Where does your deal with Mark Cuban stand now?
Alper: We had to sign a non-disclosure agreement so I can’t talk about it. But it’s being worked out now.
Adams: Have you had any contact with Mark Cuban since you taped the show?
Alper: I have not.
Adams: How has your appearance on the show affected your business?
Alper: We got a lot more downloads.
Adams: What do you say to people who suggest that Hater is a gimmick and not based on any empirical evidence about compatibility?
Alper: Our No. 1 goal is to offer something that’s a lot more fun than the other options out there. We kept hearing that online dating seemed like a chore. You swipe, swipe, swipe, then you go out on a crummy date and then you start over.
Adams: Are you romantically involved with anyone?
Alper: I do have a girlfriend who I met right around the time I started Hater.
Adams: Did you meet her online?
Alper: We were in mutual friend groups. Online dating is a great resource for people who don’t have the time or don’t like meeting people in real life or who have very specific requirements for a partner. But I believe there’s no substitute for real life.
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Categories: Money Matters