Grindr Unveils New AI Features, Details Premium Membership Tier

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1:29in weeks. Sign up today at brilliant.org slash tutor and get 20 % off. That's brilliant.org slash tutor. Bloomberg Audio Studios, podcasts, radio, news. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. While shares of the LGBTQ dating app Grindr fell on Friday after the company's improved full-year revenue forecast still trailed the average analyst estimate. The company said it now expects full-year revenue to be about $540 million, up from the$535 million, and adjusted EBITDA of about$232 million, up from $227 million. It also said it expects to finish the year with, quote, meaningfully fewer employees than we had originally planned.

2:16We've got George Harrison with us, the CEO of Grindr. He joins us here in the Bloomberg Businessweek studio. Hey, George, welcome back. You're about five months into the debut of some of these new AI features, some of these new subscription tiers that you're testing out. Can you just update us on how that's going? So the tests are going really well. The product features are quite popular with users and they work really well. The product itself is very tested. We're not trying to figure out what the price should be. We've never launched anything at this price point before. That's very premium focused.

2:49Small number of users will ever use this product. And so we've been iterating on what's the best way to position the product and explain it to them. What are you thinking about right now? Well, we tested 80 bucks as the baseline price and that did very well. Annually? No, monthly. Monthly, wow. Yeah, which is 2x our previous highest price point. We've tested prices all the way up to 375. And there's a broad range of where it might land. We'll see. That is extremely premium. Very premium. Tell me about the$80 though, what will that entail? If I am paying$80 a month, what am I getting out of it?

3:26So historically Grindr's premium or paid tiers have given you access to more people. You would see more people based on how much you pay. Extra gets you 500 people. Unlimited gets you unlimited number of people. This one gives you a lot more information about the people you see. So on the profile, you have now AI generated information about a person. We go through all your messages and we create a short list of people you should be talking to and summaries of all the conversations that you've had with them, which is like a short list of kind of your prime targets. And then we also give you recommendations of people you should engage with based on what we know about you and we know about them.

4:02So it's a very different set of features that we have previously. When you're testing out the different price points, what are you noticing about the way that people are, I don't know, the way that they're thinking about the stickiness of it or just how receptive they are to it? Does it change based on location? Well, this product is more sticky than other things we thought it would be, which is great. On the price point, obviously there's elasticity between higher the price, less people try it. But there is also some no elasticity at the top because some people just don't care. And I think that's kind of part of this, like how many people do you want in the product versus how much revenue do you want to make from it in total?

4:44And for us, we've said publicly this is going to be the driver of revenue growth in 27 and 28. And so it's a balance of finding what's the highest price point for the total number of users you want to be in the product. So when you think about the user base and you dig into those individuals that would be willing to pay that price, what demographics come up? Are we talking about younger users, older users? Where does it fall? So Grindr released some demographic data last year in November. 46 % of our users are under 29, so in that kind of 18 to 29 age range in the U.S., and their pay rates are actually quite low.

5:17But we like keeping it that way because we want them to have a really awesome experience in the free product. And then as users age, their pay rates increase significantly and kind of peak at that 40-plus age cohort. This product is very much targeted at the older user who wants to pay. The ones with more money. Yes, because they have a lot more disposable income, exactly. I'm curious about the way that Gen Z is interacting with the app and the way that you've had to make changes to have Gen Z interact with the app. We actually haven't changed anything specifically for Gen Z. We have tried to innovate a lot more in the app overall.

5:50My general view is that Gen Z actually is totally fine dating online. They just want products to be innovating and creating new features. In what way, though? So we added things like albums. We added saving all your messages so they don't get lost from phone to phone, which was a big deal on Grindr. We added ability to send pictures that disappear as soon as they arrive. Just a few examples of kind of what's happened. And I think people, you know, 46 % of our users are under 30. That's not even, like Gen Z is even bigger than that. But just that small cohort of Gen Z is, you know, 50 % of the product.

6:23So we have no issues with getting Gen Z onto the product. It's actually, there's a ton of opportunity with the older user base to get them reengaged with the product versus worrying about, hey, is Gen Z going to be coming to Grindr or not? So how are you thinking about AI? I mean, when you think about AI, is it something that you believe can meaningfully improve the dating experience? Or do you think that too much AI will actually make that dating experience a little bit more, less lifelike, I should say? Look, we are a product that aims to connect people digitally so they can then meet in person, right?

6:53So we don't want the in-person thing going anywhere. That's ultimately the core of what Grindr is about. That said, density is an issue for all gay people because outside of New York, you don't have enough people to really match with. And if we can do better matches in a broader geography and people are more willing to take a risk on meeting somebody further away because they know a lot more about what that person's about, then I think AI really helps. So I think AI is going to be ultimately a big benefit to products like us. Obviously, there'll be some growing pain along the way because you'll make mistakes and things will happen that people don't expect.

7:28But ultimately, users get to decide this kind of stuff. What about AI encoding? This is something you've talked a lot about. You've written a lot about it. You've communicated with investors a lot about it. The thing that struck me in your most recent earnings report last week was your talk about headcount and the way that you said you're going to end this year with, quote, meaningful fewer employees than we had originally planned. Give us the numbers here, the details, and why you're doing that. Is it AI? Well, AI has been incredible for coding. We have increased our age productivity by minimum 2.5x.

8:01with a team only growing 15%. So it's like an incredible change. Now, I had an example that I got in my Slack this morning where an engineer saw a bug come in while he was walking his dog, told Devin, which is one of the eye coding tools we use to go look at the bug. Devin looked at the bug, replicated the bug, wrote the code to fix the bug, and sent the engineer a message saying, hey, it's ready to be checked in. Do you want to go release it? all while he was still walking the dog. And a human being was walking the dog, not a robot. Yes, he was walking the dog. That's the only part of this equation that's missing.

8:36Okay. So does that mean fewer engineers? Well, I think we just need less people overall in the company. So we haven't fired anybody, but we're going to hire roughly 20 less engineers than we had planned this year because we are getting so much productivity from the team. Do you think you will fire or have any layoffs? I don't think so. Not because of AI. I mean, we are always performance managing, but not because of AI. But we will grow slower than we would have otherwise. You've also invested a lot in product development, especially around the release of Edge. So once Edge is actually fully rolled out and driving revenue in 2027, is there room for product development expense to moderate?

9:12Not really, I don't think, because we want to invest in the future. I mean, Grindr already has incredible margins. I think we're guiding the year to be like, what, 42 and a half. So can we be a little bit better than that? Sure, but I'd rather take the savings that we see from less people and actually invest it back into the product and into making the product a lot better because we want this company growing at the pace that it's growing, not just for the next couple years, but for the next 10. Can you just help us understand the competitive landscape a little bit? There was some news earlier this year that Match Group invested$100 million in Sniffies.

9:46The investment gives them the option to buy a remaining stake in Sniffies. What's the competition that you're seeing from them right now? We've had a ton of competition always, both from straight products that have gay users and gay-specific products. Sniffy's is one. There's another company called Scruff. There's a company called Tumi. There's a bunch of companies. I'm very glad that Sniffy's got the deal done that they did. I think our success in the public market really helped match board, become more convinced in doing that deal, which is great for the ecosystem. But I don't really worry about competition very much.

10:17I focus on what we can do for the users and how to create a great experience. But does it show you that other products resonate for certain reasons with a specific demographic? Like, does it make you say, okay, well, wait, why is Sniffies working with this group? What can we adopt that they do and bring it into our app? I mean, I think Match tried to build a product for the gay user base themselves, and they failed. And then they decided to try to have an acquisition from somebody else. I think some of the stuff at Sniffies does make sense. Basically, Sniffy's as a product started out because Craigslist shut down personals because of concerns around trafficking with people.

10:52And Sniffy's replicated a lot of what that offered to the more kind of cruising audience. And that's the product that they have. And there's an audience for that product. And it seems to work really well. And, I mean, how are you thinking about market share scale? Do you foresee any acquisitions down the road? We are certainly open to acquisitions. I think if we do them, they'll probably be more adjacent to us versus specific to the core use case that we now offer because we're pretty good at that already. But there are definitely areas that we've looked at. I mean, given that we are the biggest player, most things that are for sale come to us one way or the other, and we take a look at them.

11:31But things where we think we could, you know, for example, know that health is a huge opportunity for scale and growth, and gay men's health is a unique kind of enterprise. And so if there is somebody that we might benefit from acquiring in that space, we'll be open to that. But we're not really actively pushing it. But also, oh, sorry, go ahead, Nora. What qualities would these companies have to possess? I think they need to be doing something that we're not doing and have some expertise and things that we don't yet know that we would otherwise have to figure out one way or the other. And we are a pretty lean organization.

12:04We kind of call that Grindr mode. We work pretty hard at Grindr. I don't think we're quite, say, Elon level, but we are more hardcore than not. And that's something that I think companies that we might look at would then need to share. But again, that's very second. Like, we don't have a corporate dev team. It's not something we're really in any way focused on. We're focused on the opportunity that we have in front of us and trying to grow that as much as we can. George, appreciate you joining us here in person. It's good to see you. Thanks for having me. George Arison, CEO of Grindr. The company's up about 21 % so far this year.

12:37market cap of around$2.9 billion.

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