Zodier Looks To Disrupt The $3.7 Billion Online Dating Game
The multi-billion dollar world of online dating has not moved on very much from the days of users downloading an app and then filling in forms about themselves in order to find love. For younger generations this is a turnoff; they want direct plug-and-play access from their go-to online platforms—because love isn’t necessarily the first thing on their minds.
It was a problem that startup Zodier looked at and found a solution for: dating within messenger services and existing social media like Facebook, Instagram, Telegram and Viber. This was a more user-friendly model with greater appeal to a ‘want it now’ mindset.
That, at least, was the theory that the Belarussian-born founders of Zodier, CEO Matvey Gramovich and chief technical officer Slava Kalevich, relied on to get the project off the ground and growing worldwide. “The data suggest that out of those who would be willing to look for a date online, around half—equivalent to 300 million people—are weary of installing an app and Zodier solves that,” Gramovich said.
That potential customer universe is appealing, enough that six angel investors have jumped onboard. The biggest is Yauheni Tamashevich, CEO and founder of SpurIT—a company that offers development, marketing and customer support functions in e-commerce; as well as serial digital entrepreneur Dimitri Mikhalchuk who also has the role of chief investments officer with Zodier.
Together with other funding, the business—now largely relocated to Poland with ownership in the U.K. via Noirix Technologies—has so far raised around $800,000, with a further $1.5 million being sought. The value of the online dating pie is projected, by Statista, to reach $3.7 billion this year, and have a compound annual growth rate of over 6% until 2026.
More than $800 million of the 2022 revenue is estimated to come from the U.S. alone—a market that boomed during the 2020 pandemic lockdown with growth of 18% in terms of smartphone dating app users according to eMarketer. Dating apps like Match.com, eHarmony
Nevertheless, worldwide user penetration of 5.4% in 2022 is expected to hit 6.4% by 2026, and if in-messenger chatbot services get going, they could help that percentage rise. However, dating startups like Zodier are up against big hitters.
Fortunately, in the tech space, market share is not a barrier to entry because a good idea can change everything—and quickly. At Ukraine-based software development and support company KeyUA, chief technology officer Andrey Onopriyenko commented in a blog post: “While it may seem there is no chance to fight the competition with a brand new product, that’s not actually true. Modern dating apps lack advanced features like AI-based matchmaking, self-learned UX technologies, gamification, and others. There are many opportunities to create a product with competitive advantages.”
Zodier believes it is in that precise space. Launched in October 2020, the company has managed to push up users to 2.6 million people, and found that the Asia Pacific market has been particularly receptive. The business is now setting its sights on the U.S. where it claims to be the first to receive approval on Instagram’s chatbot platform to provide dating services.
Zodier essentially works like Tinder: users ‘like’ or ‘dislike’ photos of other users. So chatting can only take place between two people who have liked each other. The tech behind the chat is where Zodier believes it has an upper hand. One of its advantages is to offer cross-platform functionality so that users of different social networks can find each other in its online dating service.
The chatbot also has some basic matchmaking skills of its own: it can determine compatibility based on date of birth, age and location for example. They may be crude parameters but they are a starting point and they also ensure verification of genuine and real users. “We are basically simplifying online dating using an interface that is intuitive and user-friendly,” said Gramovich. “We think that dating, messengers and chatbots are a perfect match.”
Quick growth—but can it last?
Kalevich said: “Zodier picked up 10,000 users in its first two weeks, and we only spent $1,000 on promotion. Now, we have more than 2.6 million registrations. We plan to grow to five million users and $100,000 in revenue per month. To date we have not seen any other online dating projects that are growing as fast in this already crowded market.”
Zodier told me that as a very young company it was “too soon” to talk about turnover but from the point of profitability the owners are looking to break even by “early 2023.” The team seem confident that their formula can disrupt the market.
The company’s patent-pending technology employs a proprietary high-load algorithm claimed to be “the largest chatbot-based dating application out there despite a few companies trying to copy our model” according to Gramovich.
The founders also believe their service took off quickly because their marketing strategy was tighter. “Usually, dating apps buy ads on social networks. Someone sees an ad, installs an app, and then starts using it,” the CEO said. “Zodier buys Facebook ads, someone sees those ads, and starts using the product. By taking out a step in the sales funnel, we have drastically reduced the cost of registration.”
Monetization brought forward
Conversion is also likely to be higher. Zodier says that people on average open and read 80% of messages in messengers whereas push notifications in mobile applications are only opened and read about 7% to 8% out of the time.
These are key considerations for a startup. “Low transactions cost time and money,” said Gramovich. “In mobile apps, the commission on sales in the Apple Store and Google Play reaches 30%. Zodier’s standard expenses are 3% commission of bank payment systems.”
The initial strategy from the company was to build a big community of over a million active users, before beginning to charge for monthly subscriptions or one-time upfront fees. But with the economic and geopolitical climate changing for the worse, Zodier has brought its plans forward, to stabilize the business.
“To monetize Zodier, we use the ‘freemium’ model, like most of our competitors. The service is free, but there are charges for additional features that simplify the work of the service even more.” However it turns out that cultural quirks mean that one size doesn’t fit all. “We see that different regions require new ways to monetize. For example, we are experiencing exponential growth in Indonesia, but subscriptions don’t work well there. Instead, we are trying to monetize through advertising and one-time payments,” said Gramovich.
This is similar to the model used by Amazon
From Eastern Europe to Asia and beyond
Initially, the Zodier chatbot only worked in Telegram and attracted many users from Eastern Europe. The team continued to test their product in different countries. The big surprise for them was the explosive growth of users in Indonesia and other Asian countries. Now, 70% of Zodier’s total users are from Asia with 70% of its audience up to 25 years old and a male to female ration of almost 50:50.
“In Indonesia, there were up to 20,000 registrations per day. To be honest, we are still pleasantly surprised as to why people there use our service so actively. We see a high conversion rate from advertising to registration (20%). Plus, there is a good virality—people share information about Zodier on their messengers. When these users find our dating service, it’s something new for them and it sticks,” said Gramovich.
“Our ambitions span the globe. In the near future, we plan to enter the Indian market with a chatbot in Telegram. We are also making a chatbot for Viber for users in Eastern Europe and another for Line and KakaoTalk for Japan, Malaysia, Thailand and Singapore. However, we are now mainly focused on the American and European markets. We’ve just launched a chatbot on Facebook Messenger and we plan to monetize it by the end of the year,” said Gramovich.