Coffee Meets Bagel Dating App
NO DEAL
EPISODE SUMMARY
🕓 Air Date: January 9, 2015
Asking For:
$500,000 for 5%
Investor:
No Deal
Deal:
No Deal
PRODUCT SUMMARY
Coffee Meets Bagel is a dating service aiming to revolutionize online dating by curating one daily match, sourced from a user's friends of friends, and allowing mutual consent interactions within 24 hours.
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Background Story
The Kang Sisters, Arum, Dawoon, and Soo, are the brains behind Coffee Meets Bagel, a revolutionary dating service headquartered in San Francisco. Born and raised in South Korea, the sisters later migrated to the United States, bringing a unique blend of cultural perspectives to their venture. Prior to delving into the world of online dating, the Kang Sisters had diverse professional backgrounds. Arum, armed with an MBA from Harvard Business School, had experience in investment banking, while Dawoon had worked in the tech industry with a focus on digital marketing. Soo, the third sister, added her expertise in design to the mix.
The inception of Coffee Meets Bagel was inspired by the shortcomings they identified in the online dating landscape. Frustrated with the impersonal nature of traditional dating websites and the inundation of inappropriate messages, the sisters envisioned a platform that mirrored the organic way people meet in real life, through mutual connections. Drawing inspiration from the idea of serendipitous encounters, they merged the concept of daily flash cell sites with social networking elements. Coffee Meets Bagel was conceived as a departure from the prevalent online dating stigma. The name itself, seemingly unrelated to dating, was strategically chosen to create a sense of intrigue and privacy for users discussing the service.
By curating one high-quality match daily, sourced from friends of friends, the sisters aimed to provide a safer and more enjoyable dating experience. Their vision was to empower women in the online dating space, allowing them to regain control and avoid the uncomfortable interactions often associated with other platforms. The Kang Sisters’ cultural background, combined with their business acumen and tech expertise, laid the foundation for Coffee Meets Bagel’s innovative approach to modern dating. Their journey reflects not only a commitment to disrupting the status quo but also a dedication to creating a platform that fosters genuine connections in an increasingly digital world.
The Product
Coffee Meets Bagel, the brainchild of the Kang Sisters, is a distinctive dating platform designed to revolutionize the online dating experience. The core functionality centers around presenting users with one carefully curated match every day at noon. This match is selected based on mutual connections, tapping into the idea of friends introducing friends, creating a more authentic and personal connection.
Upon receiving the daily match, users have a 24-hour window to review the profile and decide whether to express interest by liking or to pass on the match. If both parties express mutual interest, a private chat line is opened, allowing them to connect within seven days. Coffee Meets Bagel goes beyond the conventional by incorporating virtual currency called “coffee beans.”
These beans unlock premium features, such as “Open Sesame,” which reveals the number of mutual friends without disclosing their identities. The platform’s innovative approach offers several benefits. By limiting matches to one per day, it encourages users to focus on quality connections rather than swiping through countless profiles. The emphasis on mutual connections adds a layer of trust and authenticity to the interactions.
While the core service is free, users can purchase coffee beans to access premium features. The pricing structure for coffee beans enables users to customize their experience based on their preferences and needs. Coffee Meets Bagel’s unique blend of thoughtful curation, limited daily matches, and premium features contributes to its appeal as a refreshing alternative in the competitive online dating landscape.
How It Went
The company’s position before Shark Tank
Coffee Meets Bagel demonstrated a robust performance with substantial growth. The company, headquartered in San Francisco, had experienced double-digit monthly growth since its national launch. The founders, the Kang Sisters, had successfully positioned the platform as a unique and innovative player in the competitive online dating market. Coffee Meets Bagel’s success was further underscored by notable partnerships, most prominently with an investor who was a co-founder of Match.com, adding credibility and strategic guidance to the venture. This partnership not only brought financial support but also reflected a validation of the platform’s potential in the online dating industry.
In terms of funding, the company had raised a significant amount of external funding, totaling $2.8 million. This financial backing had facilitated the development and growth of the platform, allowing it to expand its user base and enhance its features. However, despite the impressive growth and partnerships, the company had not yet achieved profitability. The founders acknowledged negative profits due to substantial spending, primarily on salaries for developers. They revealed that each founder was drawing a $100,000 annual salary, contributing to a total of $300,000 annually. This salary structure, while significant, was portrayed as a pay cut for the founders.
Coffee Meets Bagel’s funding strategy involved a combination of external investments and, as disclosed in the pitch, plans to raise more money to support their ambitious growth targets. The company aimed to bring on approximately 4 million new users in the next year, projecting $10 million in sales and a break-even point on this revenue. The company’s structure and operations were not detailed extensively in the pitch, but the focus on external funding and plans for significant user acquisition hinted at an expansion-oriented approach. The performance snapshot indicated a healthy user base, strategic partnerships, and an ambitious yet calculated plan for future growth, positioning Coffee Meets Bagel as a key player in the dynamic online dating industry.
The Negotiations:
The negotiations for Coffee Meets Bagel on Shark Tank were a rollercoaster of interest, skepticism, and ultimately, a surprising turn of events. The Kang Sisters entered the Tank seeking $500,000 in exchange for a 5% equity stake in their innovative dating platform. However, as the pitch unfolded, the sharks raised various concerns about the company’s financials, growth strategy, and the risk associated with its ambitious plans. Mark Cuban, intrigued by the potential of Coffee Meets Bagel, made a groundbreaking offer, proposing $30 million for the entire company. The Kang Sisters, surprisingly, turned down this substantial offer, expressing their confidence in the platform’s future growth potential, comparing it to the success of Match.com.
The other sharks, however, were less convinced. Kevin O’Leary voiced his concerns about the company’s high salaries and negative profit despite increasing sales. The founders explained that their strategy involved raising more money to accelerate growth, emphasizing that they had the choice to either grow the business traditionally or raise additional funds to make it big. One by one, the sharks bowed out of the deal. Cuban himself, despite making the record-breaking offer, withdrew, citing his reluctance to accept a mere 5% equity in the company.
The Kang Sisters remained resolute in their vision, asserting that they were ready to grow the business either way. In the end, the negotiations concluded without a deal. The Kang Sisters left the Tank with no sharks on board, turning down the largest offer in Shark Tank history, confident in their ability to propel Coffee Meets Bagel to new heights. The episode highlighted the delicate balance between risk and reward in the entrepreneurial journey, showcasing the founders’ determination to chart their course for success.
