Web Masters Episode #85: James Hong


Hot or Not Review May 2022 - Money pit or real encounters? - DatingScout

James Hong:

Yes, it was like the most superficial thing in the world. The reality is we weren’t saying that looks were important, we were just saying, if you want to get an honest rating of how attractive you are, this is where you can go, because the reality is you can’t get an honest opinion from your friends or the people around you.

This is like, who’s going to tell you to your face you’re a two, right? Either you’re actually hot and someone’s like, “You’re a 10, it’s obvious,” or you’re always going to end up with like, “Oh, you’re like a 7 or 8,” because if you said you’re a 9 or 10, they won’t believe you. If you tell them you’re a five, you’re going to offend them. It’s like seven or eight was always kind of like, “You’re not a model, very few people are models or whatever, but you’re a pretty good looking person.” That’s what you’re going to get. We actually saw it as a service to people to get an honest answer from the internet. It was 100% superficial. We weren’t saying looks mattered, we were just saying if you want to know where you rate, now you know.

Aaron Dinin:

Speaking as someone who definitely remembers his friends telling him he’s like a seven or an eight on the old hotness scale, the honesty of this episode’s guest does feel a little uncomfortable at times, but well, maybe that’s a good thing. We all probably need a bit more honesty in our lives and that’s exactly what you got if you were brave enough to submit your photo to the website built by this episode’s guest. His name is James Hong and he was the co-founder of HOTorNOT.com. Are you ready to hear the story? Let’s get dialed in.

[INTRO]

Aaron Dinin:

Hello, hello, hello. I’m Aaron Dinin. I’m a serial entrepreneur. I teach entrepreneurship at Duke University and this is my podcast, Web Masters. It’s the podcast where we learn about entrepreneurship by talking with some of the internet’s most impactful innovators. This is definitely a fun episode of Web Masters. Well, I mean, they’re all fun. This one is maybe just a little more lighthearted than normal especially if you recognize the website we’ll be discussing. It’s HOTorNOT.com. Admittedly, it’s kind of a generational website, so in case you don’t know what it is, here, I’ll let our guest introduce it and himself.

James Hong:

Hi, my name is James Hong. I am the co-founder of HOTorNOT.com, which no longer exists. It was a early internet website where people submitted their picture for other people to rate on a scale of 1 to 10 on how hot they are. Then it was also a dating site. It was a first dating site to do kind of speed dating online where both people have to kind of opt in to each other before they can communicate.

Aaron Dinin:

Just to clarify, is that hot as in heat hot, are these people sweating?

James Hong:

Well, yes. In some cases, if they’re really hot metaphorically, then yes, that could actually lead to heat hot individually or together, I don’t know, but no, hotness as in attractiveness.

Aaron Dinin:

That’s right. On this episode of Web Masters, we’re discussing a website where people uploaded photos of themselves and asked the internet to rate their attractiveness. As strange as that might sound, it was actually one of the most popular websites in the world. We’re going to talk about why it came to be and how it came to be right after I tell you about our sponsor.

Web Masters is brought to you with health and support from our partner and sponsor Latona’s. Latona’s is a boutique Mergers and Acquisitions broker, that means that they’re a company that helps people buy and sell businesses. In their case, they specialize in cash flow positive internet businesses. In other words, things like content websites, Amazon FBAs, Shopify stores, SaaS apps, and surely even websites where people rank the relative attractiveness of other people, so long as it makes money. Basically, if you have a profitable internet business and you are trying to sell it, contact the team at Latona’s and their expert agents can help you get it sold for a great price, or if you’re hoping to buy an internet business, Latona’s can help you too. Just head on over to the Latona’s website where you’ll see lots of listings for all the businesses they’re currently helping sell. That website is of course latonas.com, L-A-T-O-N-A-S.com.

What I love about a website like HOTorNOT.com originally called Am I Hot or Not, by the way, is that for me, it demonstrates how new technologies don’t really change anything about human nature. By that I mean, people tend to discuss new technologies in terms of how they revolutionize things, but I’m not convinced that’s true. From what I can tell, new technologies are much more likely to create more efficient ways of keeping things and people the same as they’ve always been. According to this episode’s guest, James Hong, there’s good reason for this.

James Hong:

Over 100 years, technology changes a lot, but over 100 years, people don’t. We do evolve over thousands of years maybe, but our DNA is still primed based on all of the constraints of the world that have been around since the caveman. And so, we are still basically cavemen and it’ll change, but it takes eons for our DNA to change for natural selection. It’s slow. We like to think of ourselves in time scale, average lifespan, 80 years. A matter of 10 years, 20 years feels like a long time to us, because it’s a big chunk of our lives. But if you look at society and mankind, it’s nothing but a blip. People are like, “Oh, self-driving cars.” It’s been 20 years or whatever. I’m like, “That’s nothing.” We think of everything in our own time scale, but really our time scale is very short. I think that there’s a disconnect between how people think about what is a long time.

Anyway, my point is 100 years ago, people were pretty much the same as us. The only reason that there were not more selfies in our grandparents’ generation is because it costs the equivalent today of $100 a picture. It’s not because they wouldn’t have taken them, it’s just expensive. Just like now with the digital camera, I’ll take pictures all day. Even 20 years ago, it was like, “Oh, I got 36 pictures on this roll and it’s going to cost X dollars to develop this thing,” which was unfortunate because also that meant my pictures, I didn’t take a lot of them, so they all sucked. We’re probably better at taking pictures now as a result.

Aaron Dinin:

Nerd alert here, but what you’re saying reminds me of a literary theorist named Wai Chee Dimock. She’s at Yale and what she describes is a concept called deep time. It basically points out how humans tend to think of things in 70 or 80-year time scales, because that’s the average length of our lives, but that most phenomenon take a lot longer than that to fully evolve hundreds, even thousands of years. What we need to do is we need to learn to, I guess, zoom out our perspectives on the world around us in order to better understand it.

James Hong:

Also, anything that happened before us is ancient history. Say, World War II was roughly 30 years before I was born. It’s kind of weird because there was no difference to me as an extreme, like something that happened 1,000 years ago and something that happened 3,000 years ago, it’s all kind of the same, way before me. I don’t know. I just kind of had this epiphany at some point in my life where I was like, “Wow, that stuff actually happened not that long before I was born.” It kind of makes you feel weird when you think about these kind of things could happen. To my parents, it was just like yesterday.

I think back to, say, the ’90s, it’s just like yesterday. There’s really been no time between now and then, but to someone who’s younger now, they’re like, it’s just some weird abstract history book thing that is not really connected to their own lives, because you don’t see the continuity if you weren’t there. Availability heuristic like what you experienced is real and everything else is just abstract memories written on paper or something like that. And so, there’s no way to distinguish between them except by this number system that we use for years to indicate time, which is an abstraction as well. Two years, what does that mean? It’s a number. Anyway, sorry.

Aaron Dinin:

I realize all this talk about time scales and the slowness of human evolution probably seems a bit unrelated to a podcast about a website where people rank other people’s attractiveness, but bear with me. I think it is relevant, so give me a few minutes to explain. It actually relates to the purpose of this entire podcast project. For example, I make my students listen to a lot of these Web Masters episodes. At first, they don’t necessarily understand why they should care about companies that they haven’t always heard of, and in some cases don’t even exist anymore, but it’s like what James pointed out, which is that if you weren’t alive or even just consciously aware of something’s existence, it might as well have not existed at all so far as you’re concerned. By the way, that’s not just true of my students.

James Hong:

There was this funny story I read when Marc Andreessen met Zuckerberg. I actually think I introduced them actually, because we were all at a party. I’m not sure if they met before that. I’m pretty sure I introduced them, but Andreessen had some story about how Zuckerberg was basically like, “Oh, what’s Netscape?” He is like, “What do you mean what’s Netscape?” Because Netscape really only lasted for a short time and then it was all Internet Explorer. Now, it’s all Chrome.

He was actually alive when Netscape happened. He was actually in junior high and he could have used it, but he probably didn’t, but it’s like it didn’t happen to him and he was alive. It didn’t happen to him. It happened at the same time as him, so even that is different. We know what we know, but we don’t know what we don’t know and it’s interesting that you’re doing this podcast because people are always like, “Oh, Tinder invented this thing.” I’m like, “Well, actually, no. We did it before them. This whole double opt-in dating.” But because the writer is younger, they never knew what I did, so they didn’t know that it existed before. It didn’t exist to them.

I’m not claiming we invented anything and neither did Tinder. My point is that what people don’t experience themselves, they don’t even know. A lot of things just get lost. Things before me, I don’t know about. Anyway, I’m just kind of fixated on this notion that people not knowing what they don’t know is actually the cause of a lot of things.

Aaron Dinin:

Mark Zuckerberg, one of the most important and impactful tech entrepreneurs in history and hopefully future Web Masters guest, fingers crossed, didn’t even know what Netscape was, which basically created the web and internet as we know it. Why? Because it was slightly before his time.

Anyway, what I want people to understand is that from an entrepreneurial perspective, the website or company I’m featuring on any given episode isn’t as important as the underlying phenomenon that makes people want to use it. The fact that a major web browser existed before Chrome and someone like Mark Zuckerberg didn’t even know about it, well, that’s interesting because it should remind us that fundamental human needs remain generally stable even as new technologies come along to help serve those needs.

In fact, that’s pretty much what the best entrepreneurs do. They identify fundamental human needs and figure out how to address them in unique ways using new technologies and business models. The guest on this episode of Web Masters, along with his co-founder Jim Young, did exactly that for one of the most basic and fundamental of all human needs, which is physical attraction.

James Hong:

If a person you find attractive walks through the door, you recognize that before you can even think and recognize that you recognize that. Our monkey brain is faster than our human thinking brain. We didn’t invent anything. We were just giving an outlet for something that your brain and your body just do.

Aaron Dinin:

You didn’t invent checking out whether or not someone else is attractive, I can certainly agree with that, but you did build a big company around it. Let’s maybe hear that story. Where did the idea for HOTorNOT come from?

James Hong:

Well, the origin story is that we’re a couple of nerd engineers who hung out and just basically people watched a lot and we go to parties and talk about girls and my co-founder and I have very different taste in women in terms of what we found attractive. And so, we would have conversations every now and then like where he would find someone attractive and I wouldn’t. At some point, there’s like, “Oh, wouldn’t it be kind of cool if there was a website where you could just rate people and then you can see what other people think and you can get a definitive answer as well.” That’s I think the extent to which we talked about things, but then on top of that, we were obsessed with viral marketing. We wanted to create something we thought would be big. There was this guy called The Turkish Stud. I don’t know if you know who he is.

Aaron Dinin:

I did not, in fact, know who he was at the time of the interview. I’ve since done a bit of Googling and learned a few things. The first being that you should be very careful about Googling the phrase Turkish Stud in a public place. Second, The Turkish Stud was a man named Mahir, who’d built a homepage in broken English about his love for the accordion, travel, and women. It got shared as a sort of early joke meme kind of thing that turned Mahir into a global phenomenon in one of the earliest internet celebrities. Think real life Borat. For a brief time, Mahir’s personal website was one of the most popular sites on the internet and he was touring the world, showing up everywhere from advertising campaigns in England, to late night American talk shows playing ping pong in a Speedo.

James Hong:

That guy got super, super famous. It was just funny because at the time, all these internet companies were spending millions of dollars trying to get users. I remember I signed up for some weird service. I don’t even know what it was, but I know I got a gift certificate for a $50 or a $100 free massage. I got that for signing up 10 of my friends, which I think was like 10 email addresses I created or something like that. This Turkish Stud guy was like huge. He was on Letterman, there was no marketing dollars and the guy didn’t even do it himself. He just got big. We were fascinated by that because we thought it was just hilarious because this guy got what all these companies were trying to get. It was just viral. People didn’t really understand how powerful word of mouth could be on the internet.

His name was Mahir, The Turkish Stud, and I had the Mahir screensaver. We just wanted to be him and it wasn’t about building the business. It was just like, we wanted to build something that could get big with no dollars. That was kind of what’s in the back of our head. At some point, Jim and I were talking, we had this idea of, “Oh, what if you could rate people or whatever.” We’re like, “Hey, that could be actually pretty viral because it’s fun.” It wasn’t completely random. We thought a lot about it. We thought about how it could grow and stuff. Jim built it. It did in fact take off like crazy.

I sent an email to 42 friends or something like that. That was at 2:00 in the afternoon. I think by the end of that day, we had gotten like 30 or 40,000 IP addresses in our logs, which we equate back in those days because of proxies to maybe being a couple hundred thousand people. And so, we’re like, “Holy cow!” Infrastructure to support that traffic was insanely expensive. We almost shut the site down two or three days into it because I had just finished my MBA. My partner was still in grad school. We had no money. I was in debt like 50K or something.

And so, this thing launches, and I remember saying this to Jim, I was like, “Hey, this thing right now is going to cost us $10,000 a month and it’s doubling every four hours or something like that.” We literally almost shut it down until I talked to somebody who was already working in the internet industry, this is ’99. He was like, “If you shut this thing down, I’m going to kill you.” Do not shut this down, so we didn’t shut it down and we figured out ways to make it work.

Aaron Dinin:

Like what? How would you be able to figure out ways to pay for all that traffic without just paying the cash price of it especially in the late ’90s when traffic was so much more expensive?

James Hong:

To give you a benchmark, back then, one megabit per second cost about $1,000. I don’t know how much it’s now. It’s probably 10 cents. I don’t even know. It’s nothing. It is literally nothing now, but back then, it was like, “Holy cow, we’re going to go bankrupt.” And so, first thing we did is I cut a deal with Rackspace, which was a new company back then. I basically called them and said, “Hey, listen, we have a lot of attention and we are a perfect case study for your value proposition. We don’t have money up front. We need to be able to scale quickly.” Back then to scale, you had to buy machines, literally buy them yourselves and rack them yourselves in a data center. That process takes weeks. To order, to get them, to rack them and all that stuff takes time.

Rackspace, their value propositions, you can add machines right now, because they’re already online waiting for you. And so, we cut a deal with them, help us scale, and we will talk to everybody we can about how you help us scale. I was like, “I’m going to be on some TV show today.” In fact, that hits your audience because developers found what we did very interesting too. It wasn’t just the mass market using the product, but the story of how we were scaling this thing was actually a story that developers found interesting. We were probably one of the first examples of LAMP stack scaling, LAMP being Linux, Apache, MySQL, PHP back in those days.

And so, anyway, we cut a deal with them and they’re like, “Don’t worry about machines, we’ll scale you. Don’t worry, just grow.” That was amazing, because I don’t know what would’ve happened if they hadn’t done that. It was this guy, [Lou Morman 00:18:13], who was a biz dev guy there who just saw it and saw it as an opportunity and basically scaled us for free.

Aaron Dinin:

That is pretty great, pretty lucky even.

James Hong:

The MBA lesson here is basically, you don’t have to do things by the book. You can be creative. Actually in high growth, new situations, doing things by the book are often not the answer, but what you can do is take inventory of what you do have to offer. Rackspace, their normal thing is you give me money, I’ll give you servers. I don’t have money. I’m $50,000 in debt and my hosting bill’s like $10,000 a month and growing. I don’t have money, but what did I have? I had attention.

That was actually more valuable to them than the money. And so, when I mentioned that, a light bulb went off in Lou’s head. He’s like, “Oh, this is actually an opportunity for us. This is good for us too.” And so, if you think of money for services or money for products, that’s just a barter. Money is just a thing. It’s an asset that you can barter, but it’s not the only asset that exists that has value to people. I really tell people like when you’re really starved for cash, when you’re trying to make a deal or a sale or whatever, you got to think in terms of what is going to add value to the other person and it might not be what they traditionally barter for. It might be, like I said, attention or whatever. And so, that really worked out well for us.

Aaron Dinin:

Any other examples of using creative solutions to solve some of these big scaling problems?

James Hong:

We did a deal with Ofoto. There’s a guy, James Joaquin, who is at Obvious Ventures now. I said, “Look, we have people who have digital cameras.” Back then, not many people had digital cameras, but the people uploading their photos have digital cameras, or they have friends who have them. Our sign up flow was, if you don’t have a digital camera, submit your photo this way, but if you have a digital camera go to Ofoto and sign up and then give us the URL of the photo on Ofoto. Ofoto hosted those photos. Then everyone else, actually, we didn’t host their photos either. We sent them to Yahoo! GeoCities. Yahoo! had a free website builder and we basically told people, “Go build your website over there, upload your photo there, and give us URL of the photo.” Yahoo! and Ofoto were paying our hosting bills. Because most of that hosting bill, that $10,000 a month and doubling every whatever was to host the photos. That was the bandwidth that we needed and that we had to pay for at $1,000 per megabit per second.

There’s a funny story around that too, because actually, a month after we did that, Yahoo!, they made it so their servers looked at the page that was serving the content and if it wasn’t Yahoo! GeoCities, they blocked it. But they special case whitelisted us. I never knew why until one day, I met whoever was running GeoCities at some point in time years later. I was kind of nervous to ask him about it because I didn’t know if it was a mistake and I didn’t want him to be alerted to it, be like, “Oh, wow. We should turn that off.”

Anyway, I worked up the courage to just say, “(beep) it. I’m going to ask him,” because I just had to know. I’m like, “Hey listen, I don’t understand why are you letting us do this?” He looked at me and he’s like, “You know what? It’s not an accident. We did whitelist you. Basically, we didn’t want to be the guys that killed HOTorNOT.” And that was it.

Aaron Dinin:

All right. That’s a pretty lucky reason too. You built this enormous website with millions of people, grading the attractiveness of other people. You got really lucky in a lot of ways, being able to keep it running, but surely, just the subject matter of the site led to some controversy and outrage too. What was the response to this, I guess we might call it incredibly superficial seeming website?

James Hong:

There’s two, I guess, dimensions of controversiality in what we were doing. One was the superficiality and the second one that people would think about would be sexism and misogyny. Let me address the second one first. We were actually rating more men than women. It was kind of funny because people would push me on this. What you’re doing is completely misogynistic and sexist and so on. I would tell them we are superficially rating more men than women and giving them a taste of their own medicine in many cases. Oftentimes, people don’t rate as highly as they think they do.

Actually, once I kind of told them that, most people I talked to were like, “Oh good, good.” It’s like, “Stick it to them. For once they’re going to have to deal with someone looking at them and rating them a two.” In reality though, I’ll tell you, only 2% of people who came to the site would submit their photos. We did also worry about what is the psychological impact of someone getting a low rating until we kind of realized, I think I was a four or a five. Deep down, I already know that. Society already tells me that going out to the nightclub or bar or whatever, I know I’m not the 10. But my mom says I have a good personality and somehow, that gave me enough confidence to where I’m like, “You know what? I know I’m not a 10, I’m a 3 or a 4 or whatever. I’m okay with that.” But my point is the people who were willing to submit their photos, there was a pre-selection filter there of people who were probably already confident that it wasn’t going to matter to them.

Now, we did have a problem with people submitting other people’s photos and making them feel bad about it, but people who submitted their own photo didn’t really have that issue. I mean, I guess that’s a third issue of controversy, but the first one of superficiality, how did we deal with that? We didn’t deal with it, we embraced it. Yes, it was like the most superficial thing in the world. The reality is we weren’t saying that looks were important, we were just saying if you want to get an honest rating of how attractive you are, this is where you can go because the reality is you can’t get an honest opinion from your friends or the people around you.

This is like, who’s going to tell you to your face you’re a two? Either you’re actually hot and someone’s like, “You’re a 10. It’s obvious,” or you’re always going to end up with like, “Oh, you’re like a 7 or a 8,” because if you said you’re a 9 or 10, they won’t believe you. If you tell them like you’re a five, you’re going to offend them. It’s like seven or eight was always kind of like, “You’re not a model, very few people are models or whatever, but you’re a pretty good looking person.” That’s what you’re going to get.

We actually saw it as a service to people to get an honest answer from the internet. It was 100% superficial. We weren’t seeing looks mattered. We were just saying if you want to know where you rate, now you know. Look, if looks mattered, I would be single, but it just didn’t matter. There’s a lot more to relationships than looks.

Aaron Dinin:

You mentioned a problem with people uploading other people’s photos. How did you deal with that? I mean, that seems like it would’ve been a really major issue, no?

James Hong:

The funny thing about that is that if someone posted someone’s photo without their knowledge in a bullying way, we would often hear from them. Our policy was if anyone ever says, “Hey, that’s me, take it off.” We take it off. We were not in the business of trying to bully anyone. We didn’t want it to happen. If it’s a joke, the butt of the joke is going to find out that’s the point of the joke. Someone is trying to bully them. We would get 5,000 to 10,000 submissions a day and we would get an email, two emails a day maybe saying, “Hey, please take me off.” There’s some multiplier on people who didn’t contact us to say, “Hey, can you please take this off?” Let’s just say, it’s 1 in 10 people actually take the initiative to contact us. Then, it’s 20 out of 10,000 people or something like that.

We didn’t want it to happen and we were not cool with it. We would just take it off. If someone randomly emailed us and then their account was taken down, if that person would then email us back saying, “Hey, why did you take it down?” Then you can go into like, okay, prove to me that you’re you. Just send me a picture, write HOTorNOT on your hand and show it or something like that. This is before people were adept at Photoshop and make it look real.

A mistake that a lot of entrepreneurs make is trying to solve problems before their problems. We did worry about that problem, but it turned out to actually not be as big a problem as we thought it would be. And so, actually trying to solve it by putting up really high hurdles upfront probably would’ve killed the site and it turned out not to be that big a problem to my knowledge to this day. I could be wrong. I don’t know what I don’t know, but you know…

Aaron Dinin:

James is actually bringing up another interesting entrepreneurial point here and that’s how inexperienced entrepreneurs tend to over-optimize for potential problems rather than actual problems. It’s something you have to be careful about or you risk wasting valuable resources.

James Hong:

You have finite resources. You don’t know that it’s going to be a problem. It’s possible that I could end up driving my car into a really muddy field someday and need mud tires to get out. Maybe I should go spend $1,000 on mud tires and drive around with mud tires all the time. No. Deal with the muddy field when you get to the muddy field. If you are a billionaire, fine, you can put mud tires on your car, because you’re not going to need that $1,000 for anything else, but if you’re a startup, you might need that $1,000 to do something that actually will move your needle. In this metaphor, the $1,000 isn’t just money, it can be time, focus and so on.

Aaron Dinin:

It’s funny when I’m talking with entrepreneurs who are trying to over-engineer for problems that don’t exist yet, I tend to remind them that these are good problems to have rather than preemptively trying to solve things, they’re problems they should actually hope for because it means they’re doing something right.

James Hong:

That’s what I tell people. I was like, “If you have a problem of you have 10,000 people submitting their picture every day and 1,000 of them are fake, that’s actually a good problem to have. That’s a problem to fix.” A problem to fix is a privilege, not a problem. You are lucky to have problems. You know what? The one problem that is bad to have is that no one gives a (beep) about what you’re doing. Anything else is like, you’re lucky. People are paying attention to you, what you’re doing matters. Having something where there is a problem is an opportunity to have a system that doesn’t have a problem. That also works for people and it does something for them.

The goal is not to avoid problems. Actually, sometimes you can seek those problems because behind those problems are solutions. Solving problems is a competitive advantage over other companies who don’t take that route and never solve the problem. They’re never going to work. They’re not going to scale up or whatever.

The best example of this I can think of is one of my best friends is Max Levchin who started PayPal. PayPal had the problem of fraud. At their worst point, they were losing $12 million a month or something like that to fraud. I remember hanging out once with Max and with Jeff Skoll, Jeff was one of the founders of eBay, and eBay was PayPal’s biggest competitor, but also eBay was where PayPal grew.

Anyway, eBay was always trying to compete with PayPal before they bought it. Basically, Jeff’s like, “You know what? We never could have beaten you guys because we could never have taken that level of fraud because we’re a public company. We couldn’t lose $12 million a month.” For Max, it was an opportunity because that fraud is what enabled him to create a system that could model fraud and modeling the fraud is what beat the fraud. eBay could never model that fraud because they couldn’t beat the fraud because they were not allowed to even get that fraud to begin with, because they were a public company and the street wouldn’t allow them to. That fraud, that problem to solve was actually why PayPal beat eBay on payments.

Aaron Dinin:

That’s a really great point, and I guess it kind of speaks to what you all were able to do at HOTorNOT, which was, I guess, overcome these really difficult problems of having lots and lots of traffic. Surely, you weren’t the only site that would’ve been kind of a popular meme-ish type site. Those other sites couldn’t always overcome all those difficult scaling problems. You did, however, and it enabled you to build a business around HOTorNOT, so I guess my question is what was the business model you eventually used in order to monetize on all the traffic you were able to, I guess, preserve with your creative solutions to scaling?

James Hong:

We evolved it into a dating site, but actually, having the idea of wanting to do a dating site was one of the original goals. We actually tried to build the dating site a year before HOTorNOT, but then we got sidetracked by something else and started something else in between. But anyway, basically, what we realized was we needed to make money. Today if I was starting something like that, I would keep it free because there are other ways to make money off scale. But at that time, the only way to make money on the web besides doing direct subscription was advertising and advertising just made the quarter of a cent CPM. It just wasn’t enough.

We had to find something to charge for. We did the first double opt-in dating site, what Tinder does today, but what we did was we said, “If you match with someone, in order to write each other, one of you has to be a paid member.” Honestly, we came up with that model based on how we thought the real world worked, at least the real world for guys who were not 10s like us, where it’s like in my 20s, if I went to a bar and I talked to a girl over drinks, she wasn’t the one buying the drinks. I’m buying. Not to say that she needs me to buy her her drink, but I’m just saying it was typically the guy who bought the drinks in those days.

And so, we kind of based it on that model. I’m sure the guys who were six-pack and whatever, they didn’t have to buy the membership. It’s just kind of a hierarchy of hotness. Anyway, that was a model that we came up with. One person has to buy drinks. Then we also extended it into, we were, as far as I know the first website in the US, or at least in the Western world to sell virtual goods as well. We had the concept of you can buy someone virtual flowers, $1 or $2 for a basic flower and $10 for the red rose kind of thing. That was how we monetized and going direct subscription made a lot more money than advertising in those days.

Aaron Dinin:

From what I’ve read, it was a pretty successful dating site for a while. You guys sold it and I’m trying to figure out why did you ultimately step away?

James Hong:

Honestly, we sold for a song in 2008 when the crash was happening and honestly, we were just so tired of HOTorNOT. It was an amazing run in the beginning. It was an amazing challenge for us. We built this thing. It was a lot of fun. Intellectually, career-wise and socially, it was a blast, but both my co-founder and I, we enjoyed puzzles. We really enjoyed problems. At some point, the thing just became a cash cow that was like, we were bored of it. I think what happened was we saw our friends starting other things, a couple of our friends started YouTube and then they sold it for $1.6 billion in 15 months or something like that.

I mean, what we had was great. We were living the dream and actually YouTube was started when those guys were trying to create our lifestyle actually. We were friends with them. In fact, the first version of YouTube was a HOTorNOT copycat of our dating site, a video version of it. They wanted the lifestyle business, but in the end, they ended up creating something that was way bigger than a lifestyle business and we were kind of jealous of that a little bit and we were bored. We weren’t solving any new problems. Honestly, we felt trapped. It was like a relationship that was great for us when we were younger, but it wasn’t what we wanted to do anymore.

And so, at some point we’re just like, just get out. Financially, obviously, it would’ve been much better if we had stayed in because mobile happened and then Tinder and bringing that mode to mobile, it was an order of magnitude jump or orders of magnitude jump in ubiquity and profitability. Actually, people don’t realize this, but HOTorNOT was ultimately acquired by a company called Badoo who took the code and it’s kind of funny. They saw what Tinder did and Tinder was a copy of HOTorNOT’s dating system. This company Badoo bought HOTorNOT, stripped the rating side of things. We had rating and dating. They said, “Let’s just copy Tinder and become pure play dating.”

And so, it became a derivative of a derivative of itself, HOTorNOT. It was a copy of Tinder, which was a copy of itself and they then launched that and then they relaunched it as Bumble. And so, it actually still exists. The concept’s not entirely gone, at least this is my rationalization that what I did isn’t completely destroyed and gone.

Aaron Dinin:

To be fair, it really isn’t an entirely unreasonable rationalization. I mean, maybe the HOTorNOT became Bumble part is a little bit of a rationalization, but the truth is HOTorNOT actually inspired lots of other websites, including, as James mentioned YouTube, which began as a video version of HOTorNOT. On top of that, HOTorNOT did everything from provide free hosting to Twitter during the first few years of its existence, to pioneering some of the common innovations on the web that we all now take for granted. In other words, whether or not you remember HOTorNOT, or even if you weren’t alive when it existed, you are certainly still feeling its impacts.

James Hong:

There are things that I can look at in the web. My fingerprint is on it. That’s actually pretty satisfying just knowing in my own small way, I mattered a little bit. Maybe I ended up… A player that looked promising in the beginning, but ended up like a really good first base coach. I don’t know, that’s me, but the coach gets to hang out on the field and I’m happy to watch other players do better than I did. That’s great and if I can have a part of that.

It’s been really satisfying in two ways. One is seeing my work, seeing our thoughts transform, but live on in the world. That’s been satisfying. It’s like creation. The main benefit of creation is seeing your baby grow up. Little things, when we started HOTorNOT, when you submitted a form, when you did anything online that was interactive, you had to hit a submit button. Now, you go to Amazon or Yelp or whatever, and you just click a button and it goes, it knows because of JavaScript. I think we were the first ones to do that. I never saw anyone do that before. When you rated someone on HOTorNOT, when you hit the radio button, it just went. We contributed what I call it, the auto submit radio button or whatever. Little things like that, there’s a lot of little things that we did that we think still exist in the world today and we contributed to it. That’s very satisfying.

The other thing is it gave me credibility and it gave me money to invest in and help other startups, internet-related, but also, now, I’m doing mostly bio-related and machine learning-related type stuff. It just enabled me this lifestyle where I’m able to do that. And so, from a personal satisfaction standpoint, I’m very thankful that I was able to have the opportunity, which I feel is actually still a somewhat unique experience.

There’s a club of people on the internet. It’s a bigger club now than it used to be, but there’s a club of internet of people who bootstrap stuff and never raised money and just built things or had something explode on them and they got their 15 minutes of fame or even longer. It’s like a club. It’s like, they get it. And so, I’m glad to be a part of that club and it’s also enabled me to become friends with a lot of really interesting people. I may not be a billionaire, but I am one of them in that sense. I get it. It’s fun to hang out and talk with me because I get it. And so, anyway, I’m just stable for so many things, but probably the most is the fact that it’s enabled me to have a lifestyle where I can help other people and give advice, but also be lazy and watch Netflix all day.

Aaron Dinin:

And so, that’s what you’re doing now? You’ve become an investor?

James Hong:

To be honest with you, I haven’t really worked since I sold the company. I’ve just been angel investing, but I didn’t really like telling people I was an investor. I don’t even still today think of myself as an investor. I’m more of an entrepreneur who just is also lazy, too lazy to start something. Now, I just basically say, “Oh, I just help companies like a consultant, I guess.” I don’t know. Sometimes when you enter a country, you have to say what you do on their immigration forms. It’s just changed. It’s been like retired was actually one for a while, but then that led to more questions actually, so then I changed it to consultant I think. Maybe now, I think I just put investor or something like that.

When you tell people you invest, I started telling people that originally because it was a great cover because investing, you don’t actually have to work on a day-to-day basis, but it sounds like you’re important. Like, “Oh, you’re an investor. That’s amazing. Oh!” But in reality, it’s like, “Well, I watch a lot of Netflix and if you want to talk about trash reality television or whatever’s playing on Netflix or Hulu or HBO Max, I’m your man.”

Aaron Dinin:

That actually makes a lot of sense. I mean, in a way, HOTorNOT was kind of a type of reality entertainment and it was actually even coming of age as reality TV was really starting to take off. Certainly, the two things are playing off the same basic phenomenon of watching and judging other people. I feel like you would probably have seen a lot of interesting trends in how people used HOTorNOT that in a way kind of mirror why reality TV is so popular. Out of curiosity, was there anything particularly interesting you learned from watching people using HOTorNOT that’s kind of fundamental to basically the superficiality of people judging other people and loving stuff like reality television?

James Hong:

Actually, we learned a lot of things about running HOTorNOT. From looking at the data of who rated who attractive and so on, actually for women, the distribution was much tighter. My theory was that it’s because we’re trained by society to know what a good looking woman would be by advertising and by media. They define this is an attractive person and they do it a lot. We’re kind of brainwashed into believing that whatever they dictate as attractive as being attractive. It’s less now I think because the internet has changed how distribution works and it allows for more diversity and I think that’s great, but I do think that basically, society was programmed to think X, Y, and Z attributes, that’s attractive.

For men, well, first of all, men aren’t put into ads as much as women, frankly I think. Part of that is I think, because if you say that straight people are the majority of people, I don’t think that would be controversial to say, that more men like to look at women, but women like to look at men and women. In fact, actually women might actually like to look at other women more even if they’re straight. It’s just because they like to look at what they’re wearing or what their style is or whatever.

If you open a women’s magazine, it’s not actually, Playgirl, it’s not all dudes, it’s actually more women. And so, my point is that we’re programmed by society, by the media, what is an attractive woman and we are not programmed as much on what an attractive man is. There’s less force definition. And so, what we saw in the votes was that the vote distribution of any guy was much broader than for women. But anyway, the superficiality we just embraced and said, “Yeah, it’s completely superficial.” The reason that the site took off was because people are superficial to some degree. Like relationships, it generally takes more than that superficiality to create a real relationship. It’s kind of tongue in cheek. It’s like, you actually hope that it’s not important in life, but there it is. It is superficial.

Aaron Dinin:

I mean, judging people’s attractiveness and photos online is superficial, but it’s also honest. For better and for worse, people constantly judge other people on their attractiveness and on plenty of other things too. It’s what people have always done and I have to assume they always will, which goes back to what I discussed in the beginning of this episode. The most successful new technologies don’t change basic human nature, instead they augment it, enable it, and even take advantage of it. HOTorNOT.com is certainly a brazen example of doing so, but if you stop to think about it, you could probably argue the same thing is true for pretty much every other venture we’ve explored here on Web Masters. Does that mean at some fundamental level successful entrepreneurship is about exploiting human nature? Maybe. After all, entrepreneurship is at its core about providing value to people. What’s more valuable than enabling our most basic instincts? At the very least, HOTorNOT is a great example of how successful an idea can become when it lets people do more of what they already want to be doing anyway.

Hey, while I’m on the subject of letting you do more of the things you want to be doing anyway, this podcast, am I right? Make sure you are subscribed wherever you listen to podcasts so you get the newest episode as soon as it’s released. Feel free to judge me as much as you want, just as long as you’re listening, that’s all I really care about. Well, that and I also suppose I care about all the people who are helping me pull these episodes together including our audio engineer, Ryan Higgs, and, of course, our sponsor Latona’s. If you’re interested in buying or selling an internet business, be sure to check out latonas.com. I also care about all of our wonderful guests on these episodes, including this episode’s guest, James Hong.

If you’d like to get the latest updates about your favorite trashy reality shows, be sure to follow him on Twitter. He’s @jhong. This podcast is on Twitter too @WebMastersPod and I’m on Twitter @AaronDinin. That’s A-A-R-O-N D-I-N-I-N. I don’t discuss much reality TV, but I do have lots of content about startups, business and entrepreneurship. You can find everything in one place over on my website. It’s aarondinin.com. If that’s not enough, be here to check out our ever expanding archives wherever you listen to podcasts, that should keep you busy until we’re back with our next episode. Until then, it’s time for me to sign off.

[OUTRO]

Aaron Dinin:

It’s interesting that you were talking about the relationship between HOTorNOT’s dating platform and something like Tinder, because I found that in the online dating space, there’s lots of debate about who invented what. I’ve spoken with a bunch of online dating guys, Gary Kremen of Match and Andrew Conru of FriendFinder, even a guy from the 1960s who was running a computer dating service from his dorm room at Harvard. It’s definitely a bit of a gray area in terms of who figured out what and when and how and why.

James Hong:

Let me tell you something. Nobody invented online dating. Online invented online dating because basically as a species, we’re always dating. It doesn’t matter what you do. People met each other on bulletin boards and married, I’m sure. It just doesn’t matter if there’s a way for people to connect and be attracted to each other, find emotional connections and, or have sex, they’ll do it.

And so, our DNA invented dating and that’s why we survived and HOTorNOT was an online port of speed dating, but we didn’t invent speed dating and we didn’t invent dating either. We just brought it online and did this double opt-in thing. But whatever, I mean, who invented it? Who invented eating? Did McDonald’s invent eating? Did the inventor of the stove invent eating? No. This is just built into us. I don’t even think it matters who… We’re all just adapting new tools, new technologies to that age-old compelling product, which is dating.