Joey Levin, Online Dating Guru

(Bloomberg Businessweek) -- Levin was a junior investment banker at Credit Suisse First Boston when Barry Diller brought him over to IAC/Interactive Corp. in 2003; 12 years later, he succeeded the billionaire media mogul as CEO. Today he’s solving the riddle facing almost every tech chief executive: How do you compete with Amazon.com, Facebook, and Google? The answer: Don’t. Levin built a digital powerhouse by finding white space the tech giants have mostly ignored. When he saw four years ago that Facebook was steering clear of online dating, he doubled down on IAC’s Match Group, with $1.5 billion of sales, marketing, and advertising spending to make its Match and Tinder apps dominant. Match Group shares are up 60% this year, and profits are expected to top $500 million for the first time. Now he’s spinning off the company so the market can more easily value smaller IAC businesses, such as video platform Vimeo. He might do the same for Angi Homeservices Inc., the home improvement booking engine he created by merging IAC’s HomeAdvisor.com with Angie’s List.

IAC continues to find overlooked areas. In July, Levin invested $250 million in Turo Inc., which lets people rent out their cars when they’re not driving them. He needs to keep prospecting: Facebook introduced its own dating service in the U.S. in September, and earlier this year, Google forced Angi to pay more to get referrals. Edited excerpts from Levin’s conversation with Bloomberg’s Erik Schatzker.

What’s the secret to competing with Big Tech, as you do with Facebook in dating?

They’ll always have distribution advantages. They’ll always have cost advantages. We can have a better product. We’ve got a group of people who eat, breathe, sleep, and live dating. Success or failure depends entirely on dating. For us, having nowhere to hide is a huge advantage. The other thing is, their product is free. Some of our products are not free. You’re saying, “OK, I’m committing to this in some sort of way, and it happens to be with money.” That’s a signal, and those signals are important in dating.

Earlier this year, Google made a change to its search results that limited free clicks to the Angi homepage. You think of that as an abuse of market power.

Google wants to take all of that distribution, or portions of that distribution, for itself. It’s frustrating. That’s designed to exclude us.

Why spin off businesses like Match and, before it, Expedia? Why not become an internet conglomerate?

We’re not empire builders. Match casts such a huge shadow over the rest of IAC that if we make a $50 million bet or $250 million bet on a business, no one cares. It’s lost in the rounding. If we’re going to keep building new businesses, we’ve got to focus. Eliminating the thing that starts to make life easy and focusing on the hard things is how you build them up.

What’s the one thing you learned from Diller that continues to shape IAC?

Thinking bigger. You think, We have zero revenue, and there’s this opportunity where we can make $20 million. Wow, that would be unbelievable. But then you say, “Why aim for $20 million? Why not $200 million? Why not $2 billion?”

To contact the editor responsible for this story: Bret Begun at bbegun@bloomberg.net, Jeremy Keehn

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