The cofounder of OKCupid says 3 lucky moments led him to run a multi-billion-dollar company
Hollis Johnson/Business Insider
- ShopRunner CEO Sam Yagan is the cofounder of SparkNotes and OkCupid, and was head of the dating site conglomerate the Match Group for seven years.
- He said that his Syrian immigrant parents passed on skills that enabled him to become an entrepreneur.
- Yagan credits his success to taking full advantage of lucky opportunities in his life.
- After having risen as high as he could in a corporate hierarchy, he wants to now focus on "mattering."
Sam Yagan knows he's been lucky.
He told us for an episode of Business Insider's podcast "Success! How I Did It" that one of the luckiest moments of his life was meeting his college roommates. Together, they built a study guide website called SparkNotes. Then, they built an online dating empire.
They started the site OKCupid while Yagan was getting his MBA at Stanford. The idea came from one of those college roommates, and it grew into a business with tens of millions of users.
Yagan is now the CEO of ShopRunner - a company that brings Amazon Prime-like benefits to customers for use on a network of shopping sites - but he's best known for his seven-year tenure as the head of the Match Group, which includes OkCupid, Match.com, and Tinder.
He tells us that it was his Syrian immigrant parents who developed his drive to be an entrepreneur.
Listen to the full episode here:
- Former Navy SEAL Jocko Willink
- Duolingo founder Luis von Ahn
- Audible founder and CEO Don Katz
- Media mogul Tina Brown
The following transcript has been edited for clarity.
Richard Feloni: Your parents were immigrants from Syria, and I saw that you said that their experience gave you a great education in entrepreneurship. What did you mean by that?
Sam Yagan: I often get asked how I got into entrepreneurship. People ask, "Did you have a paper route? Did you have a lemonade stand? Did you have a job early in your life?" And the answer to all those is no. And the more I think about it, the more I think that immigration is the ultimate entrepreneurship, in many ways. I mean, if you think about what an entrepreneur is typically signing up for, they're typically giving up something of certainty, right? A job, or income, or a career, or money, for some very speculative long-term outcome that they think it's going to be good, but have no idea what that journey's going to look like. And that idea of being super, super comfortable with uncertainty, being super comfortable with the unknown, this idea that, just never give up, this relentlessness, were all attributes that I realize my parents have been imbuing in me, had been teaching me or demonstrating not to be an entrepreneur, but just because that's how they lived.
Feloni: What were you like as a kid?
Yagan: Oh, I was super nerdy. I mean, super, super nerdy. My parents made a very conscious priority to Americanize me, and I think that's one of the great things about our cultures. For most immigrant families, this idea of becoming American is a really important part of that transition to the first generation of American-born kids. I think I was a pretty normal kid in that I loved the Chicago Cubs and I loved to go outside and play basketball.
Feloni: In Illinois.
Yagan: Growing up in Illinois, yeah. Michael Jordan was drafted when I was 6, so it was, like, I thought all teams had the best player ever. But I was a super math nerd, and up until my high-school years, I started growing up as the smartest kid in the class. And that was my rap, for better or for worse.
Feloni: Did any of your family remain in Syria?
Yagan: Yeah. I mean, up until the war, about six years ago, virtually all my family remained in Syria.
Feloni: So with the war they all just fled?
Yagan: Yeah, I mean it's super sad, obviously. I think people basically made one of two decisions. They were either, like, "We're young enough where it's worth it to restart our lives in a country where we probably don't know the language or we probably aren't licensed to do our profession or whatever." And the people who were in my parents' generation who were, like, "You know what? I'm super old, and if this is my lot in life, this is my lot in life." If you're 82, what are you going to do? Go pick up and start over? I just think people weren't up for that.
Feloni: So do you think that there's a different mindset now, as with your parents when they were, like, "We just want to be Americans - let's forget and move on"? Do you think that you see it differently than they did?
Yagan: It's not so much "Let's forget." I think it's just, like, "We came here to be American." And so, no, I think I have both the strong appreciation for my roots and their roots, but also I consider myself the luckiest person in the world. All my cousins were born in Syria; I was born here. Not dumb luck, but, luck. So I'm super grateful, and if you just think back, there were two or three moments in my life where I got super lucky, and I think when I was younger I used to think, "Oh, I'm just super good" and whatever. And I think once you get to the point in your life where you're, like, "Yeah, I'm good, but I sure got lucky." And then I think it just puts a lot of things in context.
Feloni: When do you think you got to that point, when you became aware of it?
Yagan: I don't know if it was because the war started, but I think seeing so many of my family members be displaced as part of the war. And I was, like, "The things they think about when they wake up in the morning and the things I think about when I wake up in the morning, I've got Champagne problems." It's, like, when I was at Match, or now at ShopRunner, it's, like, "Oh, how do we compete with Amazon Prime on this? How do we build this product?" I'm, like, "That's a great problem to be thinking about." Because I'm not thinking about survival.
Feloni: So only fairly recently you rethought your life.
Yagan: Yeah, I think so.
Becoming an entrepreneur with his college buddies
Feloni: And you're saying that as your parents instilled in you this willingness to just take big risks even if you weren't aware of it at the time. When you were in college as an undergrad, at Harvard, you started SparkNotes.
Feloni: When did you decide you wanted to create something? Create a business?
Yagan: I showed up at Harvard, and one the three luckiest moments of my life was that I got placed in a dorm with these two guys, Max [Krohn] and Chris [Coyne], who are literally the two smartest people I've ever met, and two of my best friends. And it was actually Chris who first had the idea for creating a website. And the original website was called TheSpark.com. It was a humor site. And I remember Chris, he would show me, "Hey, I've been working on this thing on the side." And I would look at it and I'd be, like, "I don't really get this."
So I went back to recruiting for consulting firms, and then I'd see him again and he'd be, like, "The site's improving and progressing." I'm, like, "I don't really get this." And I went back to interviewing for consulting firms. And then, finally, in January, he was, like, "OK. We should really do this." And I'm, like, "Do what? What are you talking about?" And he's, like, "We should start a company around this." And I remember thinking, normally that'd be a big deal. You'd be, like, "Oh. I'm turning down these consulting offers, and what does this mean for my career, and money," because we didn't have any money. And I was, like, "Cool. Let's do it."
And that immediate bias toward "Let's try it" was something that I didn't have to think very hard about again, because I think I had been raised with a certain decision-making heuristic or framework where that seemed like a great opportunity to pursue. And so that was it. So it was in the spring of my senior year, when Chris, Max, and I decided we were going to make a go out of this company called, at the time The Spark, and then weeks later we launched SparkNotes.
Feloni: Were you creating those study guides yourself?
Yagan: No. One of the nice things about being in a school, a liberal-arts school with a good English program, is we had all these friends who were just getting done paying a hundred grand to a school to allow them to write papers, and so we went with this great offer: "We'll pay you 400 bucks to write a paper." And their heads exploded. They're, like, "Wait a minute. You're going to pay me to write a paper? This is amazing." And so I remember it was, like, we had spring break late in March that year, and we went to people right before their spring breaks and said, "Hey, can you spend your spring break writing this paper?" And so at the end of spring break we had 10 SparkNotes, and we put them up on the site. And we got all this hate mail. And people were pissed.
Yagan: Because we didn't have the SparkNote they needed! Because we only had 10, and they wanted "Romeo and Juliet." Or they wanted "Hamlet." Or they wanted whatever book we didn't have. And it was, like, really real anger, because they're, like, "Oh we found this site with free study guides," and then they're scrolling and they don't see what they want. But of course, that's the best kind of hate mail to get, is we need more product. And so we spent that summer, we hired a couple of editors, and their foil was to get a hundred SparkNotes up by the fall, and the rest is history.
Feloni: How'd you make a business out of it if you were offering it all free at first?
Yagan: See, you have to put yourself back in time. Any time you talk about the internet, you have to time-adjust.
So this is 1999, and so pre-bubble, and at the time, eyeballs - right? - were all that mattered, and revenue models. No one had even come up with anything other than advertising, for the most part. And so that was the idea. And if you think about SparkNotes, you can argue business models eight ways from Sunday. But I think a SparkNote is the perfect thing to be ad-supported, because it's write once and publish a zillion times, right? So whatever we paid - we paid 400 bucks for a SparkNote in 1999 - you probably have the same SparkNote up today. Maybe you update it once a decade or something. But the upfront cost is so low and the use is so high that you can make your notes profitable on an ad model. I think over time there's a huge opportunity to turn in a lot more revenue based off the study guide, but that hasn't been a priority.
Feloni: So when you went to get your MBA at Stanford, were you going into this being, like, "When I get out of this, maybe I'll go into a typical Wall Street career"? Or did you think you were going to be a founder?
Yagan: Oh, no. I knew I was never going to go to a typical career. I think once you've had a modestly successful CEO experience, it's super hard to not have that again.
Feloni: So that was with SparkNotes.
Yagan: Yeah, that was with SparkNotes.
We sold SparkNotes twice - the second time we sold it to Barnes and Noble. And I stayed at Barnes and Noble for a year, and I remember at Barnes and Noble - because they have a publishing business; they have a retail business - at the time, especially, it was a really big, successful company. And I remember realizing how much I didn't know about business, right? If you think about a straightforward consumer internet business that doesn't spend money on marketing, that really doesn't spend money really on cost of goods, although we did pay for the notes to get made, our P&L was so simple. It was, like, ad revenue and payroll - that was it. That was our P&L. I didn't have to know anything about accounting, I didn't have to know anything about marketing, I didn't have to know anything about HR. We were an 18-person company. And then you get there and you show up at an accounting meeting, and you can't get through the third minute before you're super confused. I didn't even know any of these terms. Most people go to business school for the strategy classes, and I went to business school for the core. I was, like, "Yeah, great. I'll do the strategy classes, but I want to understand how accounting works. And I want understand how HR works." That was what I knew I needed.
Feloni: You had already built a business, but you found yourself in over your head, essentially.
Yagan: Yeah. If your first job is a CEO, like, normally you'd train for this job and you'd become a domain expert, or you manage people. There are whole creative-element plans to prepare you to be ultimately a CEO, and I had none of that. And so I showed up, made a ton of mistakes, obviously, but, more than that, I just never had the foundation on which to build my professional success.
Feloni: So you had eDonkey, right? And that was kind of like a Napster for video.
Yagan: Yeah, I mean after -
Feloni: Or a BitTorrent client.
Yagan: Yeah, so after Napster had its legal demise, a whole set of decentralized file-sharing networks joined. So this is Kazaa, LimeWire, and BearShare that would have been the peer companies at the time, and we were one of the decentralized networks. Because our technology, my partner, Jed McCaleb - who's one of the best technologists ever, now super active in crypto - he had this vision for the technology, and because it was so fast, naturally people used it for video because video files are so much bigger that audio files. So we became the de facto file-sharing network for video because the technology was so perfect for that.
Feloni: Well, what is your experience with eDonkey? What did that teach you?
Yagan: You know, I think I learned a bunch of things.
One is the difference between market success and economic success. I still consider eDonkey a success. We reached millions and millions of people. We ultimately ran into the regulatory and legal headwinds. But I think I understand that a lot better now. I really value the importance of clarity in laws. People talk about chilling effects, and ambiguity, and you're going to stifle innovation. And I think some of that is real. And what entrepreneurs need, and especially investors, but entrepreneurs is, like, what are the rules of the road for this business? And we will play within the rules if it's clear what they are. I think the more ambiguity there is, there is this chilling effect of saying, "Well, I don't want to go invest a bunch of my life to build something that could ultimately just go down." So I think those two are probably two of my biggest learnings.
Unexpectedly turning into the 'king of online dating'
Andrew Burton/Getty Images
Feloni: Why did you get into the online-dating business in 2004 with OKCupid?
Yagan: Ah, because Chris called me from a bar on a Friday night and said, "We should start a dating site."
Feloni: Chris is your friend from Harvard?
Yagan: Yeah, my cofounder from SparkNotes.
It was really late; he was at a bar on the lower East Side, and I was, like, "OK - he's probably going to forget about that." And he called me the next day and said, "What do you think?" And I was, like, "Are we really going to do this?" But if you think back to the dating industry at the time, Match, eHarmony, and Yahoo were the three big places. And the faces of online dating were Dr. Phil, who had a deal with Match, and Dr. Neil Clark Warren, who's still on the eHarmony commercials. And the four founders of OKCupid were all math majors. And so we were thinking like, "This can't be the future of online dating." Like, "It can't be like these psychologists who are going to look into your soul and find a soul mate." So we just didn't believe the product premise. And Chris, who's a product visionary, really just had this idea of a matching, algorithm-based - getting people to do a Q&A. That really became what, I think, to this day is still the gold standard for matching.
Feloni: Maybe you see it differently, but when I'm looking at these three businesses that you founded, it was hard for me to see what was driving you. Why one to the next? What did you see? How do you approach entering a business? What are you passionate about?
Yagan: In all of them they're about building great product - really thinking first about the customer and building products that customers are going to love. Preferably using either a technology transformation or business-model transformation to empower them or to enable them.
So if you think about SparkNotes, the innovation there was the internet. I know it sounds trite now, but CliffsNotes were these books and nobody had yet gone and said, "We're going to use the internet to better consumer experience." With eDonkey, it was the technology that Jed had built around getting much faster downloads, and so we were able to build a consumer experience that people loved better. And with OKCupid, it was really about using data - "big data" wasn't even a term in 2004, I don't think - using data to drive compatibility assessments. Those are the common threads. And at ShopRunner, where I spend my time now, it's all about thinking, "How can we make a Prime-like experience for the other retailers that aren't Amazon?" "How can we help a Neiman Marcus or a Kate Spade or any of our retailers delight their customers, despite not having the scale that Amazon has?"
Feloni: With OKCupid, 10 years in, online dating had become a massive business, and then people started using smartphones. How did that change how you sell what you wanted to accomplish here?
Yagan: The smartphone dynamic in dating - and people will write business-school case studies about this eventually - it had a couple of interesting effects.
I think the first is, for the first time, you could use location beyond the ZIP code. Number two, the way dating used to work was it was something people would do when they got home at night. So, in fact, we had seen our logs, like 7 p.m., that's when everybody checked OKCupid, right? It's because you didn't do it at work because you're on your computer. Now it's something that you're checking throughout the day, and it's something where, as you move around the town, or as you move around your day, who you're matching with can change.
And then the third and most important is, because it wasn't something you were doing at home in your basement, it became something you could do with your friends. We incubated Tinder while I was the CEO of Match, and I think Tinder was successful for a whole bunch of reasons. But one of them was, you could just sit there at a bar, or at your friend's, and just start swiping. And it became truly social, and not in the social-network way, but truly in terms of, "Hey, check this out." Or "Hey, let me swipe for you." And that was something that you just couldn't do if you were doing it in your basement at 7 o'clock at night.
Feloni: And so with the mainstream success of this, millions of people starting to use online dating, it's not like a weird thing anymore. It also made it easier also for, I guess, the way to say it is, like, creepy guys harassing women. Like in 2014, this Redditor had a viral post pretending to be a woman on OKCupid, and he felt like he was immediately assaulted by all these strange guys. How did you see that as the head of this company?
Yagan: Obviously the quality of the community is maybe the most important thing. And whenever somebody asks me a question about online dating, the first thing I think about is offline dating. So think about your favorite bar, right? The majority of experiences you have at a bar, where it's like a nice bar, are positive. Every once in a while, is there a fight at the bar? Or has some creepy guy hit on you? Yes, that happens. But it's up to: How does the community or the owners or the bartender police that? And so, you're always going to have the corner case, you're always going to have the one thing where someone had a terrible experience. But at OKCupid, we spend a lot of time on the algorithms to manage the amount of volume. And the nice thing that we have that a bar doesn't have is that we have the ability to say, "OK, well, let's penalize somebody who sends messages to somebody who doesn't get responded to, or let's make sure that if somebody's already gotten three messages, she's not going to get 10 more tonight." So I think we can actually use technology to balance that in a way you can't offline.
Feloni: It's an impossible hypothetical, but do you think that maybe you would have done things differently if there was a woman cofounder?
Yagan: That's an interesting question. I haven't been asked that one before. I think any time you change the mix of leadership, you're going to get a different set of opinions. I think, one, we always thought about it ... I think most dating products are created from the woman's point of view, because that is the most valuable part of the network, is to make sure that the women are there. I'm sure we would have made different decisions. But not necessarily because it was a woman - just because it would be a different set of people. But we spent a lot of time looking at the data, and we spent a lot of time talking to single people, of both genders.
Feloni: And when you became the CEO of Match Group, which is a collection of dating sites, didn't you marry your high-school sweetheart?
Yagan: I did.
There was a slow news day, where there was a headline on some website, like, "King of online dating has never been on an online date." But yes, I have never been on an online date. I've also never used a SparkNote.
Feloni: You haven't?
Feloni: Do you think that there are advantages, then, if you see it differently?
Yagan: You know, I think there's a mix. I think you have just as many people who say, "Well, I started a company to solve a problem that I had." And then I think you can also take the view that if you bring fresh eyes on an industry, you can often come up with new paradigms, or new products. And, so you could say that, yeah, that brought a fresh perspective.
Focusing on the goal of 'mattering'
Feloni: Why did you decide to go to ShopRunner as CEO, in 2016?
Yagan: I had been in the online-dating business for 13 years. I had cofounded OKCupid, I had been the CEO of Match, and I was part of the team that incubated Tinder. And I would argue that those were the three most important dating businesses ever. We're in the third decade of online dating. And decade one was Match; it was the best company. And I would argue that in decade two OKCupid was the best company. And in decade three, it's Tinder. And I look at that, and I think, at some point, you're, like, "Am I going to do this forever?" And I kind of had given the industry everything I had. And another big part of it was that I lived in Chicago, and Match is based in Dallas, and OKCupid's in New York, and Tinder's in LA. And so a big part of it was just, like, it was the right time for me to think about, what is the next chapter in my life? And I was really interested, sort of to the question you asked earlier about, "What is that theme that connects everything?" I'd liked the idea of the David and Goliath, sort of the entrenched incumbent. But I really wanted to be able to use data to make delightful customer experiences.
Feloni: So the incumbent here would be Amazon.
Yagan: Amazon Prime. And I don't think it was just competing with Amazon so much. I think they're obviously an amazing company. But I do think about this idea of Prime, which is maybe one of the best products ever made. What does Prime look like in a multi-retailer environment? That's interesting to me. And how can we use the data that we see across our retailers to maybe even make a product that has advantages over Prime? And look, our view is that we are super compatible with Prime. The vast majority of our members have a Prime subscription. In my ideal world, everyone in America has Prime and everybody in America has ShopRunner and everybody gets a great experience when they shop anywhere.
Feloni: Earlier you mentioned that there were three moments in your life that you considered to be the turning points, the luckiest things. We talked about the first one. What were the other two?
Yagan: So the first one was being born in America.
The second one was, I grew up in a town called Bourbonnais, Illinois, which is about an hour south of Chicago, in a cornfield, or across the street from a cornfield. And I went to a really great public school, as far as I was concerned. But it's probably now, with context, it was an average public school, in an average cornfield. And, again, like I said earlier, I was the smartest kid in the class. And fortunately the state of Illinois, in the '80s, created this thing called the Illinois Math and Science Academy, in another cornfield about 90 minutes away. It was a state magnet school, a public school for students talented in math and science. They found me, they sent me a letter, they asked me to apply, I applied, and I got in.
And I think going to MSA was that second super-lucky thing that you couldn't have planned for. And really, what I got out of it - a world-class education. But more than that, I learned, when I was 14, that I was not the smartest kid in the class. And I think the earlier in life you realize you're not the smartest kid in the class, the better. Because there's only one smartest kid. Somewhere in the world there's the smartest person in the world. But the rest of us aren't.
And I think the earlier in life you realize that, one, it's a huge burden, because I don't have to be valedictorian. I'm just not going to be, and that's OK. And then, No. 2, is you start realizing, "OK, well, what am I going to be great at?" And I ended up spending the vast majority of my time in college teaching. Because I thought communicating, explaining, and leading could be my superpower rather than being the best at differential equations and programming and whatever else I was doing with my applied-math degree. So that was No. 2, going to the Math and Science academy.
And the third was the freshman dean's office at Harvard put me with Max and Chris. And I think that relationship, to this day, that's what got me into being an entrepreneur, and I learned so much from them, and that partnership, was just a huge part of my professional success.
Feloni: And how do you personally define success?
Yagan: Oh, that's so hard.
You know, I think, if I had to summarize it in a word, I would say, "mattering." I want to matter. And that has a lot of lenses. But when I die, whether it's individuals or whether it's consumers, I want people to say, people's lives are better because I was on this earth. And so it could be people who work for ShopRunner. I want to build this great culture where people develop and people get to be themselves and get to be happy and I want to help these retailers succeed and grow.
I was at a dinner last night, and somebody said she'd met her husband on OKCupid and gave me a hug and took a selfie. And I was, like, "Oh my gosh." She was so happy, right? I always talk about permanence in the companies I've built. The fact that SparkNotes still exists today, 19 years after we built it, I have so much pride in that. OKCupid is still something that millions of people use every day. I have so much pride in that. And my kids are just now getting old enough to start using SparkNotes, then, ultimately, probably OKCupid or whatever. And the fact that I've had that impact and I can actually see that happen, I think that's success. It's like, "Did you matter to, first of all, most importantly, the people near you - your friends, your family - but then your employees and your coworkers and then people at large?"
Feloni: At what point did you realize this part of yourself?
Yagan: That's good question. I think, because I was fortunate to have some amount of success early in life, I realized it wasn't about chasing personal accomplishment. I think early in life you're just in an environment where, it's your personal accomplishment that is success. And I think maybe once I got to a certain amount of success I was, like, "OK, well, I don't have to go get more success." Am I going to spend the next 50 years of my life just running bigger businesses and making more money? That didn't seem fulfilling. And so then I said, "Well, what do I really value about what I'm building?" And it's the impact that I'm having on other people. And so I've used the word "matter" as that all-encompassing term.
Feloni: In an interview I saw that -
Feloni: You said - no, it's a good one - in most jobs, your early 30s to early 40s are your "power years." So, you're 41 now, right? So are you in your power years now?
Yagan: I think that, the way I see it is, I've checked all the boxes I wanted. I have no more boxes to check. So I think, I look at it, not so much as the power years, but I think now I can be really intentional about everything I do. I didn't have to take the ShopRunner job, right? That wasn't, like, I need a job ASAP. And I looked at a lot of opportunities, and I thought about starting my own new companies, I thought about taking big public-company jobs. But I was, like, "How can I build something that really matters?" And so I don't think it's so much about the power years as it is the intentional years.
Feloni: So this is when you're really focusing, and you're very cognizant of mattering, as you put it?
I remember when they offered me the CEO job at Match, which was a job I was not super qualified for, right? I was running tiny little OKCupid, 30 people, and the next day I'm running a billion-dollar business with 1,200 people, right? And I was super unqualified. But I remember thinking: "I have to take this job. I have to take the job. It is transformative for my career to go from being startup guy, startup guy, startup guy, to being big-company guy." And I was going to learn so much. So that is to me more of a power move. That is, like, OK, if you think about your job on a trajectory, or your career on a trajectory, you're, like, "Oh, this is a huge step, then I've got to take that," right? That's the big promotion.
Feloni: Like a hierarchy thing.
Yagan: Yeah. Yeah. And it was like a box to check, that, "OK, now I'm running this big company." And so I do think, like I said, the 30s are, and it happened that, that's when it happened for me. But I'm not on that box-checking power years part of my career.
Feloni: What would you say to someone who wants to have a career like yours?
Yagan: "Really?" [laughs]
I think it depends which part of it. The question I get asked the most is, "I want to be an entrepreneur. What should I do?" But I think if I don't answer that question and take a step back and say, "The career like mine, I have always tried to put myself in situations where I'm surrounded by people smarter than me." That was true for as early as high school, when I went to the Math and Science Academy. It was true, Max and Chris, and Christian [Rudder], our fourth cofounder at OKCupid, always smarter than me. And I think that is not an obvious thing to do. I think a lot of times people don't feel comfortable with that, but I have found that when I have done that, one, I've challenged myself to be my best and to keep up. That's No. 1.
And then No. 2 is, be willing to fail. And I talk about luck and failure all the time. That is, I think, the story of my career, but the thing about luck is, you can't just sit around waiting to get lucky, because that doesn't work. You've got to show up for the game, you've got to put yourself in positions to get lucky, then you've got to get lucky, then you've got to execute like hell, then you've got to actually deliver. And so I've gotten super lucky and I've failed a bunch of times. But all those things have snowballed into a situation where I've now got this set of experiences, successes and failures, and a network of a whole bunch of people smarter than me, who have really positioned me to be able to do a lot of things.
Feloni: Thank you so much, Sam.
Yagan: Thanks for having me.
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