Facebook fans may wish to avert their eyes. Alon Carmel, the founder and former chairman of JDate — the world’s largest online Jewish dating site — says the days of social-networking-cum-dating sites could soon be numbered. Mr Carmel believes such sites are putting themselves at risk by trying to do too much.
“I am not a great fan of social-networking/dating sites, such as Facebook,” Mr Carmel, who is in his 50s, tells JC Business. “They are neither here nor there. Is it dating or is it social-networking? I don’t think highly of Facebook or MySpace, and I think there will be a decline in the growth and prestige of such social-networking sites.”
He adds: “They started with a good strategy, finding their own niche and specialising in that. But then they grew to be too big and are trying to do too much. I don’t think it works.”
He says social-networking sites that specialise in a particular niche, such as YouTube for videos, will continue to flourish — more so than the big ones that are trying to cover everything for everyone.
“MySpace had its phase for a while, and I am not an expert, but the last I read, the numbers on Facebook are declining.” His comments follow a report by Nielsen Online, which showed a drop in the number of people logging on to Facebook in the UK.
But there is, naturally, one sector he still believes in. “Dating-only sites will continue to do well. They have a clear message.”
Perhaps surprising, then, that Mr Carmel never intended to launch a dating website. A former property developer, he says JDate was created by fluke. “In 1996, my business partner [Yoav Shapira] had just got divorced and we were sitting in a restaurant in Los Angeles talking about the lack of online dating.” They joked that they could create something better, targeted at the global Jewish dating scene. Mr Carmel, down and out after losing a fortune in Californian real estate, had little to lose.
They struggled to find a domain name because many of the obvious ones had been taken. They decided on JDate.
A little over a decade later, and JDate — now part of Sparks Networks, which also includes dating sites Jewishmingle.com, Date.ca and Americansingles.com — has a market capital of more than $140m. Mr Carmel, no longer involved in the day-to-day running of the company, remains the largest private shareholder. He stepped down from the role of chairman in 2005 to pursue more entrepreneurial and philanthropic interests.
His latest venture? To find the next Google. He recently joined MGIC, an investment vehicle established by Israeli businessmen Amir Raveh and Robert Pincas of Anglo-Israeli investment house MG Equity. The aim is to raise £1.5m from British investors to plough into between 10 and 12 Israeli online start-ups over the next year — nurturing and then selling them. Also on the investment committee is Ofir Paz, who recently sold his Peach Networks Ltd company to Microsoft for $100m, and Sir Andrew Burns, the former British ambassador to Israel.
“Israel is the number-two country, behind the US, for intellectual properties trading on Nasdaq,” says Mr Carmel. “It is exporting a tremendous amount of technology and successful companies. I am trying to tap into this and capitalise on it, and get British investors to do the same.”
In the past few years, there have been some headline-grabbing exits from Israeli companies, notably the sale of Fraud Science to eBay for $159m, and more recently Microsoft’s acquisition of YaData for a reported $40m.
He acknowledges that British investors have been missing out on Israeli investment opportunities, which have been dominated by US funding.
But are people not reluctant to invest given the economic climate? “I don’t see much effect in investment and opportunities in the online industry. We might see some effects in the more mature e-commerce websites in the US. But as far as investment in technology companies, I don’t see any effect in that arena.” He adds: “I think today is probably one of the best times to get involved in Israeli companies and technology.” He says there are 3,500 start-up companies are currently working in Israel.
The MGIC team have already put $250,000 into EyeView, an online provider of one-minute website instruction movies. By pressing a camera icon on the screen, users can watch a short movie on how to do something, such as auctioning an item on eBay or booking something online. The site has already secured contracts with eBay and Yahoo. Other investment targets are Sportsevents365.com, a search engine for global sporting events, and delivery service KooKoo-it.com.
What is so special about Israeli start-ups? “I think it is a combination of things,” he says. “It is the Jewish brain and the collage of Russian and Eastern European immigrants, who came to Israel with a tremendous amount of knowledge and experience in technology — plus the type of people the army is manufacturing. This provides a melting pot of East and West.”
He adds: “Living in the diaspora for so many years, it is very important to me to support the Israeli economy and technology. It is about good business with a lot of pleasure.”
Mr Carmel still gets gratification when he hears how people found love through JDate. “There are many, many beautiful stories of people meeting each other. Wherever I go, I get notes from people thanking me for what we created. It is a truly wonderful service and I feel chosen to be part of it.”
He cites one couple who were separated during the Second World War and met 60 years later though JDate. According to Mr Carmel, 30 per cent of the matches are long-distance ones.
Mr Carmel received a Bachelor of Science degree in civil engineering from the Technion University in Haifa in 1979. He splits his time between Beverly Hills, LA and Kfar Kadimir. He is married to Kathy. They have two children.