Looking For Love In The Right Places

NEW YORK (TheStreet) -- St. Valentine's Day could be a lonely and depressing holiday for the more than 105 million people who are technically "single," according to the U.S. Census. But the proliferation of online dating websites, location-based check-in services such as Foursquare and the move to combine those sites with social media tools and mobile platforms may make finding love a bit easier.

Snap Interactive ( STVI.OB) is betting on the integration of these social media tools.

The New York-based application provider's dating site, AreYouInterested.com, also has mobile and smartphone applications, particularly for the Apple ( AAPL) iPhone. What sets AreYouInterested.com apart from other dating sites is that it pulls information from a user's Facebook page, making the creation of a profile easier and simpler, company executives say.

"It's all seamless," says Snap CEO Cliff Lerner, who co-founded the firm with his brother Darrell. "The younger generation, they want to use these products all the time -- on Facebook and when they're out on their iPhone," for instance.

The company is on to something.

According to a poll last week by Zogby Interactive, nearly three-quarters of all Facebook users who are not in a relationship log on to learn about people they want to date. Facebook users between the ages 18 and 29 are increasingly more likely to use the social media site for romance-related reasons, the survey says.

A majority of participants said they check the Facebook profile of someone they are interested in dating within a day or two after meeting, according to the findings.

A few figures on just how fast Snap Interactive is growing:

AreYouInterested.com is adding 40,000 to 50,000 profiles per day, the company says, compared with 20,000 profiles said to be added daily at online dating giant Match.com, a business of IAC/InterActiveCorp ( IACI). The site has roughly 30 million users, with more than 100,000 users installing AreYouInterested.com's Facebook application every day, the company says.

Still, at the heart of the story, Snap Interactive is a small business struggling to meet the demands of its growth.

"The biggest challenge is in hiring talent," Lerner says. Snap Interactive has 20 full-time employees and is "aggressively" looking to hire a minimum of 10 engineers -- strangely hard to come by, especially in the New York area.

"We're competing with investment banks and hedge funds for engineering talent," he says. "We're all going after the top engineering talent."

The company is also looking for larger office space.

"There are a lot of things that happen with a fast-growing company," Lerner says. "You've got to make sure to keep your priorities in order in terms of managing the growth."

"For companies that have between 10 to 24 employees, the focus moves more from the owner to the business," says Mark Wolf, director of The Guardian Life Small Business Research Institute. Wolf cited findings from an April study gauging the mindset of small-business owners depending on the firm's size.

This is the point at which firms need to start looking for a designated human resources employee and learning more about best practices for finding good employees and retaining and motivating them, Wolf says.

Launched in 2006, originally as IamFreeTonight.com, the Lerner brothers quickly saw an opportunity following the launch of Facebook and decided to devote all resources to capitalizing on the platform.

"I see this from so many people in tech space -- they have no idea how people actually use their product. That's a guaranteed recipe for failure."

-- Cliff Lerner, co-founder and CEO of SNAP Interactive.

Later that year, Snap Interactive decided to go public. The stock closed Friday at $3.25, compared with 19 cents on Nov. 2, 2006, its first day of trading. Last month, the company raised $8.5 million through a private placement securities sale, with plans to use the capital to hire more employees and increase advertising.

AreYouInterested.com's business model is not unlike some of its competitors, in which users can sign up for free, but to get all the bells and whistles have to pay for a subscription. AreYouInterested.com offers one-month, three-month and six-month subscriptions, paid for upfront.

Users are also charged between $1 and $3 for various "virtual gifts" -- applications users can click on and send to other users.

Lerner notes that the firm's average daily revenue has increased every month. Fourth-quarter revenue totaled $2.7 million. (Gross cash receipts totaled $3.5 million, an increase of 50% from the prior quarter, the company says.)

The team looks to capitalize on Valentine's Day, considering its obvious significance in the dating and romance world.

AreYouInterested.com has a number of virtual gifts that have a Valentine's Day theme, eight of which were created this year, co-founder Darrell Lerner says in an emailed response.

Lerner writes there has been a 15% pickup in virtual gifts sent over the past month or so.

Snap Interactive has a growing interest in location-based offerings. More and more people will want to find out where friends, dates and loved ones are at any moment through their smartphone or other mobile device.

"We want to build features that build on Facebook in markets that are growing quickly," Lerner says.

Earlier this month, the company launched its latest application, WhoIsNear.com, which is basically a competitor to Foursquare. Users can use the tool through the Web, iPhone and other mobile devices to find and interact with friends or meet people, the company says.

"We're a big believer in the location space," Snap's Cliff Lerner says. Over the next 12 to 24 months, "more and more people are going to be using smartphones and more products are going to be location-aware. With lessons learned from AreYouInterested.com, that can really put us in the position to have a best-in-class location product."

Lerner suggests to other small businesses on the verge of breakout to "pick one thing to do really well" and to know your customer.

"I can't tell you how many times we thought we had a great idea and nobody used it," Lerner says. "I see this from so many people in tech space -- they have no idea how people actually use their product. That's a guaranteed recipe for failure."

-- Written by Laurie Kulikowski in New York.

To contact the writer of this article, click here: Laurie Kulikowski.

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