Hurry Date Case

The context of this memo will discuss which steps the founders of HurryDate, a speed dating business, should take in order to bring their business to the next stage of development. The memo will entail HurryDate's current strategies, financial statements, key success and risk factors, and key performance measures. These evaluations will aid in the decision of how to value the business and the options the owners, Deckinger and Testani, have to fund future growth.

Issue

HurryDate was founded in May of 2001 by Ken Deckinger and Adele Testani. The company became known as the brand leader in speed dating. The speed dating events consist of single men and women who rotate through a series of short dates, lasting a few minutes. The company operates these 25 three-minute speed dating events in cities throughout the U.S. and Canada. The company quickly grew, hosting 100 events monthly and reaching as high as 150 events per month during peak periods. Their age profile ranges from 21 to 45 years of age including a variety of ethnic backgrounds, religions, sexual orientations, and special interests. By 2005, the company had achieved profitability and went on to develop strong brand recognition with a loyal following.

Despite achieving profitability in 2005, the company started to plateau and was experiencing intense competition by free social networking sites and online Internet dating sites. In order to stay competitive and grow, the founders have to come up with specific strategies and resources to help them accomplish their goals.

Discussion

To understand the options the owners of HurryDate have and evaluate how to fund for future growth, many aspects of the business need to be evaluated. These are in terms of HurryDate's strategies, key success and risk factors associated with the strategies, financial statements, and performance measures.

HurryDate's current strategy is hosting speed dating events in major cities throughout the U.S. and Canada, allowing single adults to meet one another. These events involve a variety of ethnic backgrounds, religions, sexual orientations, and special interests for singles from 21 to 45 years of age. HurryDate developed relationships with event sponsors and marketing partners to enhance their performance.

Key success factors include HurryDate's success at building a reputation as a trusted host for speed dating events. They developed strong brand recognition through high customer satisfaction which gave them a competitive advantage and loyal followers. This knowledge of the firm grew from substantial media exposure and word-of-mouth customers which lead to an increased demand for services. Other key success factors include the in-depth screening and training process for hosts which allow the company to provide professional, friendly, responsible, and well-managed hosts and events. Furthermore, the company developed a unique online event management system that was designed to facilitate delegation of many event operations to locally based hosts. This also allows them to facilitate the event registration and payment process. They are able to receive substantial data such as customer and employee feedback which allows them to manage the business and rapidly expand by maintaining high quality control over the events. Lastly, the firm has virtually no fixed costs.

Key risk factors include the major free social networking sites like Facebook and MySpace who are dominating the industry with their resources and brand equity. In 2005, these sites were acquired by News Corp for $770 million in cash. During this time, Facebook and MySpace built a strong market for younger adults. This could provide the risk that young adults may find speed dating as outdated and less trendy. There was also research that supported the rise of online dating in the U.S. market. HurryDate faces competition with Internet Dating leaders including Match.com, eHarmoney.com, Yahoo! Personals, and JDate.com. These major providers make it difficult for new entrants because of the required critical mass of users, sufficient site functionality, and a means to market broadly to new users. These Internet dating sites allow privacy and anonymity with the users and allow them to search through hundreds of profiles and photos of singles. HurryDate faces other industry dating competition including Match Making and Single Events and Travel services. Match Making companies provide personally tailored services and deliver high quality service to their customers. This gives them a niche competitive advantage. Singles Events and Travel offers a relaxed social atmosphere such as wine tastings, cruises, conventions, and speed dating. Lastly, HurryDate relies on event sponsors and marketing partners to fund the growth of their business. There is risk that sponsors may decide that it is not a good use of their marketing budget or time to sponsor the company.

The financial statements reflect the success and risk factors in the following ways. The above success factors contribute to the gross profit and net income of the company. Revenues from sponsorship increased from $28,023 in 2003 to $280,000 in 2006. Sponsorships seem to present a significant source of growth and added value. Recent sponsors included Calvin Klein, Ford Motor Company, Smirnoff Vodka, Stella Artois, and Trojan. These well know brand names and sponsors helped HurryDate to increase profit. Along with this, the success factors of media exposure and word-of-mouth from customers that increased the demand for services can also be accountable for the increase of gross profit. Beginning in 2004, the company had multiple revenue sources including a growing dating website, HurryDate-branded speed dating events, and events such as wine tastings and dating information session hosted by "dating gurus". This growth and brand awareness of the company allowed HurryDate to increase events per month. These strategies had an impact on the company giving HurryDate the ability to achieve profitability in 2005.

The above risk factors also had an impact on the financial statements of the company. The statements show a decrease in revenues