Grindr CEO on AI, Premium Tiers, and Staffing

Grindr, the popular LGBTQ dating app, saw its shares dip on Friday following the release of its latest financial forecast. While the company improved its full-year revenue outlook to approximately $540 million, up from $535 million, it still fell short of the average analyst estimate. The company also projected an adjusted EBITDA of around $232 million, an increase from $227 million. In a candid discussion, Grindr CEO George Harrison revealed that the company anticipates finishing the year with "meaningfully fewer employees than we had originally planned." This adjustment comes as Grindr explores new AI-driven subscription tiers and experiences significant productivity gains from AI in its engineering processes.

AI-Powered Premium Tiers and Pricing Tests

Harrison provided an update on Grindr's integration of new AI features and subscription tiers, which have been in testing for about five months. He described the AI product features as "quite popular with users" and noted their effectiveness, but acknowledged that the company is still determining optimal pricing. "We've never launched anything at this price point before, that's very premium focused," Harrison stated. He revealed that initial tests explored a baseline price of $80 per month, which he described as "very premium" and double their previous highest price point. Tests have extended to prices as high as $375 monthly, with the final price likely falling within a broad range.

These premium tiers offer users more than just access to more profiles, a feature of Grindr's existing paid tiers like 'Extra' and 'Unlimited'. The new AI-driven features will provide users with AI-generated information on profiles, create summaries of conversations, and generate a shortlist of recommended people to message. Additionally, the app will offer personalized recommendations based on user data and preferences.

The full discussion can be found on Bloomberg Podcast's YouTube channel.

User Demographics and AI's Role

When discussing user receptiveness to higher price points, Harrison noted that the product is proving to be more "sticky" than anticipated. He observed that while higher prices naturally lead to fewer trials, there's a segment of users who are less price-sensitive. Grindr's strategy is to balance the number of users with revenue generation, aiming to make this new premium tier a key driver of growth in 2027 and 2028.

Demographically, Harrison shared that while 46% of Grindr's users are under 29, their pay rates are lower. The company aims to provide a positive free experience for this younger demographic, while observing that pay rates increase significantly with age, peaking in the "40 plus age cohort." This suggests the premium AI features are primarily targeted at older users with more disposable income.

Regarding Gen Z, Harrison stated that Grindr hasn't made specific changes for this demographic, but has focused on general app innovation. He believes Gen Z is comfortable with online dating and seeks out apps with novel features. Recent updates include albums, message saving across devices, and disappearing photos.

On the broader impact of AI in dating, Harrison sees it as a significant benefit, particularly in addressing geographic density issues for users outside major cities. AI can facilitate better matches across wider areas, encouraging users to connect with people further away by providing more comprehensive information. While acknowledging potential "growing pains" and unexpected outcomes, he believes user adoption will ultimately determine the success of these AI implementations.

AI and Workforce Productivity

Harrison also highlighted the impact of AI on Grindr's internal operations, specifically in coding. He reported that AI tools have increased engineer productivity by "a minimum 2.5x" with only a 15% increase in the engineering team size. He shared an anecdote where an AI coding assistant identified, replicated, and fixed a bug while an engineer was walking his dog, showcasing the efficiency gains.

This increased productivity has led to a strategic decision to slow hiring. "We will grow slower than we would have otherwise," Harrison stated, clarifying that while they are "performance managing," the reduction in planned hires is not due to layoffs but rather the enhanced efficiency provided by AI. He also confirmed that the company is not actively pushing for acquisitions but remains open to opportunities that complement their core offerings, particularly in adjacent areas like men's health.

Grindr's stock has seen a notable increase of approximately 21% year-to-date, with a market capitalization around $2.9 billion.