EHarmony founder back to try to right ship

Neil Warren, eHarmony founder, president and chairman of the board poses for a portrait in their Santa Monica, California office.

LOS ANGELES — Neil Clark Warren thinks he’s the best match for EHarmony Inc.

In a move that caused his friends to call him crazy, the company founder, 78, came out of retirement in July to become chief executive officer, looking to resuscitate one of the Web’s most recognized dating services, struggling amid increased competition.

“We’d gotten a bit lost,” Mr. Warren said at the company’s Santa Monica headquarters, decorated with photos of couples who met on the Web site. “Things were going backward, and we weren’t doing nearly as well as we were doing before.”

In the last three years, he said, new memberships, retention, and time spent on the site all fell. EHarmony’s most recent CEO, ex-Zynga Inc. exec Jeremy Verba, left after a year over strategic differences with the board, of which Mr. Warren always has been chairman.

At the company he created in 2000, Mr. Warren has uprooted management, naming new chief financial, technology, and operating officers and the head of public relations. He shut unprofitable global operations, switched ad firms, and cut the board to himself and one other director. Through layoffs and voluntary departures, the firm went from 260 workers a year ago to 160 today.

But his top move might be his goal to expand EHarmony to do more than online matchmaking. He wants it be a broad “relationship site” with services that help users make friends, find the right job, become better parents, cope with aging, and solve interpersonal problems, among other services.

It’s an ambitious and far-reaching plan, but one that will differentiate the company in an increasingly crowded online dating market, in which established sites such as EHarmony, Match.com, and OkCupid.com are competing with smaller start-up Web sites and apps.

EHarmony, which began as a site primarily for Christian singles, is one of the most-recognized online dating brands in the $2-billion-a-year U.S. dating services industry. It says an average of 542 people marry nationwide every day as a result of being matched on the site.

But it holds only a 13.6 percent share of the market, according to a September report by research firm IBISWorld. Market leader InterActiveCorp., which owns numerous dating sites including Match and OkCupid, holds a 23.7 percent share.

And EHarmony’s growth has slowed: Its 2012 revenue is estimated at $275 million, up 3.8 percent from the previous year. That’s down from 2008, when EHarmony had 16.4 percent year-over-year growth, IBISWorld said.

Analysts said Mr. Warren’s plan is a logical next step for a company that has amassed a virtual treasure trove of data over the years. “We have the buzz word of big data, and that lends itself to all sorts of different things. As you mine that data, you might uncover various things that could create another business,” said Kerry Rice, senior Internet and digital media analyst at Needham & Co. “I think that's a fair strategy.”

How EHarmony manages that wealth of information — users fill out an extensive questionnaire when they join, answering questions about their daily habits, likes and dislikes, experiences, and goals — will be the key to whether the ventures are successful, said Mark Brooks, an online dating industry consultant.

“I've seen a few Internet dating companies moving into other areas and failing,” Mr. Brooks said. “But in the case of EHarmony, it makes a lot of sense because they have deeper information on their users than any other company I can think of.”

The privately held company declined to release financial details but said memberships grew 20 percent last month from the month before.