The bleak science called economics says every transaction has a price. In an ‘efficient’ or perfect market, seller and buyer get what they want at the right price, at the point where the fabled supply and demand curves intersect.
A perfect market for relationships would have something for everyone, and be available to anyone, anywhere. To the market fundamentalist, Homo sapiens is Homo economicus. You demand, the market provides. For the right price.
Enter stage left, Big Data and Artificial Intelligence. Now, internet dating platforms can match specific demands with bespoke service providers. Think of it this way: Facebook and Google rely on users to 'create' ‘content’ for their platforms. (Without which, they would have to pay media companies they have 'disrupted' for content.) On dating platforms, users are themselves the content. So there’s something for everyone – as many choices as there are people.
As with YouTube and Spotify, the relationship market is being transformed by Silicon Valley into an unlimited 24/7 buffet you can’t finish in one lifetime. 'Choice,’ according to Valley ideology, is the hallmark of a global free-market economy and synonymous with democracy. Those of us who’ve bought into this idea of the unlimited supper club now number several billion on Facebook alone.
Addled by choice, our compulsive (buying) behaviour has become the norm. We know this clinical condition by its acronym of fomo (fear of missing out). One of its symptoms is the internet’s proliferation of ‘listicles’ and 'bucket lists', especially among those nowhere near to kicking a bucket. The goal in life is to try everything before you... get old. Get the best. Now.
Fomo moves markets. The more choice there is for a platform’s users, the more active it is – and the greater its appeal for venture capitalists.
The relationship market is especially sensitive to fomo. Unless you can try before you buy or are have a money-back guarantee (no questions asked!) how would you know there isn’t better? Prior to social media permeating the ether, couples committed themselves to finding out how little they knew about life, the universe and each other (to paraphrase Douglas Adams). They held their noses and jumped in. Now, we’d like some investment guarantees, if you don’t mind. What does it take to meet this market? Esquire sent its agent to meet a man who proposes. Here’s her report. – Jason Tan, editor in chief
Homo economicus rex
I’m a die-hard romantic. I don’t believe in love at first sight but I’m all for romance and happily ever after. So before I meet the man who founded something called “TheSugarBook,” which is not cake or dessert-related, I can’t help but form my opinion of said man before we meet.
TheSugarBook’s tagline is ‘Where Romance Meets Finance’. It’s a dating platform that facilitates mutually beneficial relationships by prompting you to lay on the table exactly what you’re looking for before you swipe right. Your data should include what you’re willing to pay for the privilege of company, or what you expect to get paid to provide it.
This practice isn't novel, being part of traditional and contemporary cultures in some form of gifting or apportionment of property, as well as in social escort services and pre-nuptial agreements. But tech has enlarged the market and made it more efficient by replacing the middle man or madam with an app and an internet platform.
I expect shady, cynical and smooth; fortysomething, at least. Turns out he's motivated, ambitious, pragmatic. And young. Darren Chan, founder of The SugarBook, has just turned 30. He believes wholeheartedly in his baby, and says it offers honesty and transparency in the minefield of online dating. This is because it allows each and every one of The SugarBook's members to price their expectations – or choose not to.
“I’ve always wanted to create something of value and contribute to the world. I took a look at the dating industry and, knowing how huge social media is, [saw] a lucrative business,” says Chan. “But I also knew that if I were to stay as a normal dating platform, I might as well pack my bags as I’d be no match for the big boys like Tinder and Match.com. TheSugarBook therefore, is very niche. We are focused on a very specific market: sugar daddies and sugar babies.”
Chan is referring to the classic match of older, rich man and younger woman, usually of more modest means. TheSugarBook encourages young women pursuing tertiary education to sign up but he says you’d be surprised by how young the contemporary sugar daddy is. (Not being privy to all the data, Esquire can’t confirm this, but it is notable that the global average age of the Rolls-Royce buyer today is 39.)
TheSugarBook is neither the first nor last of its kind to capitalise on the changing expectations of Gens Y and Z of our times. If the market demand isn’t growing, this man wouldn’t have marked it out a lucrative business.
“At the end of the day, I’m just an entrepreneur,” he says. “This is a platform for dating, for real people to find the better things in life – and these are real people!” Chan claims “a big chunk” of TheSugarBook’s members are single mothers, divorcees and widowers.
“My satisfaction comes from knowing I connected people together for mutual, satisfactory, benefits. I really think that the platform, if you have to summarise it, just helps people to cut to the chase and focus on what’s important: money. I’m merely providing a platform for what is already happening out there.”
What’s happening out there is prospective. In the US, land of early adopters and first movers who’ll try everything at least once, the online dating industry generated around USD2 billion in annual revenue (at last count, in 2016) and expanded at an annual rate of 5% between 2010 and 2015, says Mary-Lynn Cesar in her article, Of Love and Money, on nasdaq.com. This explains why IAC (InterActiveCorp) banked heavily on its online dating assets with the Match Group, owner of Tinder, Plenty of Fish, How About We and OkCupid. Now known as the Match Group Inc, it lays claim to a market cap of USD2.3 billion.
Online dating is also gaining traction globally, most notably, in China, where revenue is estimated to total USD1.6 billion as at 2016. Investors are interested in the market's potential. Who wouldn’t be? Capex is low, opex minimal; revenue is double, sometimes triple-fold. In 2015, German media firm Bertelsmann invested USD5 million in Chinese dating app Tantan, while Sequoia Capital and Vertex Venture Holdings sunk USD20.5 million in Qingchifan, yet another Chinese dating app.*
Chan thinks TheSugarBook has potential to scale across South East Asia because of the region’s generally pragmatic view of romantic relationships. TheSugarBook does the equivalent of due diligence for its users by gathering and analysing the data, ensuring a base level of transparency that allows for a mutually beneficial transaction to take place.
“My two-year plan is to grow and expand the platform. Right now, we have 57,000 people on it. We started in December 2016. We have mostly Malaysians, Singaporeans, some from the UK, US and Philippines but mostly Malaysians and Singaporeans on it. I’m planning to expand this to Indonesia and China, specifically Hong Kong, and expand it fast.
Chan and his younger partner have been dating for two and a half years. We get the tedious question of the way. Does he personally believe in love? “I definitely believe that money does make it easier to fall in love.”
Which brings us to the investors and expansion plans. TheSugarBook is funded primarily by family and friends. Ironically, his main criterion for a suitable investor is not how much they put on the table.
“It has to be the right person; it’s not all about the money. I need that person who will provide both money and mentorship because, money? That goes very quickly. You realise suddenly that you’ve burned through it all but are not where you want to be, nor do you know how to get where you want. So it’s about mentorship and funding. It goes hand in hand and it has to be the right one.”
TheSugarBook has competition, to be sure. A quick search online brings up several similar platforms, Seeking Arrangements (an enterprise of Singaporean origin based in Vegas and benchmarked by Chan), whatsyourprice.com, Sugar Daddy Meet, Established Men and many others, but he’s is banking on TheSugarBook’s local knowledge of market demand and how to meet it.
“It’s about sustaining the business locally. We’re local and we understand the local partner. Our competitors are from the overseas, and I’m not saying they can’t do what we do, but they will have to start adjusting and localising first.”
* * *
Unsurprisingly, Chan the entrepreneur was born when his inner techie had a shotgun marriage with marketing.
“I’ve always loved stuff to do with computers and the internet. It was internet, internet, internet for me. And when I was forced to do marketing, I fell in love with marketing. What I learned from Gigfairy (which his company Endeavor Capitals funded, now sold), I’ve implemented into TheSugarBook and the similarities are there. At the end of the day, they are both just marketplaces.”
It’s a point of view that he says is fully supported by his family, with whom he is very close; it’s what apparently allows him to dedicate himself to what he sees as his life’s work.
“Yes! In fact, let me tell you what I did for my recent birthday. I did not celebrate it with family. I did not go out with my friends. I took my team and we celebrated our birthday together in Penang. I cherish my team and they make me happy. They were the people I wanted to spend my birthday (and time) with. Because, if it’s not money, what is there to chase? Let’s put money aside, and I’ll still say that I’m really only chasing for my company. For expansion. When you know your business is good, local is not enough.”
The SugarBook team comprises eight full-time and four part-time staff. The takeaway on team-building so far: find your angel employee. “I built everything from scratch. I had an idea but no one else with me. I didn’t tell anybody what I was working on. I went on Jobstreet and this other employment platform looking for a developer and it took some interviews, but I found him – this guy who believed in me and what I wanted to do. It just grew from there. He knew who I needed to hire next and what the next step was.”
This entailed coming to terms with legal implications, the practical aspects of regulating human interaction on a platform for which it is a stock-in-trade.
“Of course it’s not all fun and games to us. Our platform recognises the Data Protection Act. We never encroach on our members’ conversations. We don’t even enable the publication of phone numbers. I have moderators who ensure that rules and regulations are adhered to and in fact, just this morning, I had to kick someone out of the website because he was basically spamming all the sugar babies in the network! We don’t allow that. We kick people out every day. Our algorithm blocks contact numbers, spamming and such behaviours.”
It remains for Chan to come to terms with the immediate and longer-term implications of TheSugarBook’s business on personal lives and the off-platform implications on social mores: there will be attempts to hack and harvest data. Then there is the question of a ‘mainstreaming’ of attitudes towards gender roles, and gender relations: TheSugarBook’s sugar baby recruitment effort is simply called, Student Program, and is described on the website as “the modern way to avoid student loan debt”. Disruptive, indeed.