There must be a better way of meeting people than hanging out in a bar, thought Jose de Lasa, now 32, while attending Tulane Law School in New Orleans and doing just that. The idea stayed in the back of his mind even after becoming a lawyer in 1996. So much so that he quit his $86,000-a-year job after a few months to start Group Encounters, a social organization, using the $10,000 his father had given him to pay off school loans.
While de Lasa went to Barnes and Noble to research how to write a business plan, Graham McAden, 28, a public relations account executive for consumer products such as Burger King, languished at his job and told friends about the "socializing service" he dreamed of opening. Then one day a friend told him someone had already done his idea.
Rather than giving up, McAden called De Lasa to "brainstorm" about the industry. A lunch powwow turned into a partnership, and by 1997, McAden had matched de Lasa's initial investment and the twosome headed a revamped activities service dubbed Social Circles. The service, which organizes outings such as rock climbing and swing dancing for singles, sends its members a monthly calendar detailing upcoming events. Interested parties then contact Social Circles to sign up. The New York City company gears all activities toward beginners and keeps the groups small, gender-balanced and segregated from outsiders. "When we send people to a wine tasting, it's a wine tasting for our group and those 20 people are just from Social Circles," emphasizes McAden.
Love is big business. With estimated sales of $400,000 for 1999 and a goal of $2.5 million within five years, Social Circles is among a plethora of profitable matchmaking businesses. The dating services industry is a $600 million market and growing, according to market research and consulting firm Marketdata Enterprises Inc. With 75 million singles in the United States whose time-pressed lives make them prime candidates for matchmaking services, you can see the big business potential. Well-run operations in major cities can take in $500,000 to $2 million per year.
"The matchmaking industry is hot for two reasons," says Trish McDermott, an industry veteran and director of communications at Match.com, an online personals service owned by TicketMaster. "From a sociological perspective, single people have a greater need today for some sort of formal intermediary in the dating process. They get married later in life, so they don't have the thriving social network of the college campus or club scene available to them. They work long hours at demanding careers and have little time to search for a romantic partner. And, finally, due to divorce, many people have to re-enter the singles scene after many years of absence."
But today's dating service are no longer stereotypical "video dating" companies. "The old method of matching up singles--charging consumers $1,000 to $3,000 for a contract specifying a certain number of matches--is no longer viable," explains John LaRosa, research director at Marketdata. "Overhead is too high [and] consumer price resistance too great."
What is hot? Activity-oriented matchmaking companies, like Social Circles, that appeal to affluent professionals. Niche markets, such as black or Jewish singles. Hottest of all are online dating services: Revenues in this category are expected to increase fivefold--to $75 million--by 2003, according to Marketdata.
Sandra Mardenfeld (email@example.com) has written about small-business issues for six years.