Question: Using information in Illustration Capsule 6.2, discuss the basis for Tinders competitive advantage and how the company leveraged first-mover advantages.

Capsule 6.2. describes how Tinder achieved a first-mover advantage in the field of mobile dating.

ILLUSTRATION CAPSULE 6.2 Tinder Swipes Right for First-Mover Success

Tinder, a simple, swipe-based dating app, entered the market in 2012 with a bang, gaining over a million monthly active users in less than a year. By 2014, Tinder was pro- cessing over a billion swipes daily and users were spend- ing an average of an hour and a half on the app each day. (Today, the average user spends about an hour on Facebook, Instagram, Snapchat, and Twittercombined.)

Tinders fast start had much to do with the fact that it was easy-to-use, without the time-consuming question- naires of other dating services, and fun, with a game-like aspect that many called addictive. In addition, Tinder was rolled out on college campuses using viral market- ing techniques that helped it to quickly gain acceptance among social circles such as fraternities and sororities, in which key influencers boosted its popularity to the point where it reached a critical mass. But its sustained success has had more to do with the fact that it has been able to reap the benefits of a first mover advantage, as the first major entrant into the field of mobile dating.

In the dating service industry, efficacy is wholly dependent on network effects (where users of an app benefit increasingly as the number of users of that same app increases). By focusing first on ensuring high usage among local social domains, Tinder benefited from strong local network effects. As its popularity spread, users increasingly found Tinder to be the most attractive app to use, since so many others were using itthereby strengthening the network effect advantage, and draw- ing ever more people to download the Tinder app. With increased volume, Tinder gained other classic first mover advantages, such as enhanced reputational ben- efits, learning curve efficiencies, and increased interest

from investors. By 2018, Tinder had more than 50 million users swiping dailyon average logging in 11 times a day for a total of around 85 minutes.

Tinders first mover advantage has not kept others from entering the mobile dating market. In fact, Tinders phenomenal success has led to a surge in new entrants, with many imitating the Tinders most popular features. Despite this, Tinders first mover advantage has proven protective in many ways. Tinders user base far outstrips the user base of rivals. And while other apps have been trying to play catch up, Tinder has been introducing new subscription products and other paid features to turn its market share advantage into a profitability advantage. As it stands, most analysts see Tinder as the mobile dating appli- cation with the highest commercial potential. And with a valuation of $3B and the distinction of Apples top-grossing app in August 2017, it seems that Tinder is here to stay.