By Daniel Roberts, writer-reporter
FORTUNE -- Nope. Nope. Nope. YES! Nope …
That might be your thought process while using Tinder, a mobile app that offers up photos of people to judge with a "yes" or a "nope" -- depending on their attractiveness. The iPhone app, which debuted in October, connects to Facebook (FB) and displays photos from a users' albums. Its genius is in the avoidance of outright rejection: When a users clicks "yes" to someone who has also liked them, it's a "match" and both users gain the ability to chat with each other. If nothing happens, the other person may simply have not seen you yet. Users never find out explicitly when someone clicked no.
That formula -- in an era when online dating is growing rapidly -- seems to work. According to a March report from IBISWorld, $1.13 billion or 56.3% of the international $2 billion-in-revenue "dating services" industry is online dating. Barry Diller's IAC (IACI), which owns Match.com and OkCupid, has a dominant 23.7% of that market; eHarmony is closest after that, with 13.6% of the dating services pie.
Unlike sites that provide a comprehensive dating profile (the average OkCupid user voluntarily answers 233 questions about themselves) Tinder is strictly photo-based. There is no list of the person's favorite movies, no default menu of hobbies to select from, no "looking for" filters beyond gender and age range. Users see only the person's first name, age, distance from their location, photos, and mutual Facebook friends or interests.
Tinder came out of IAC's research and development arm. "We keep it sort of on the DL because it's much sexier for it to be a totally fresh startup that has nothing to do with the market leader," says Sam Yagan, CEO of IAC's Match.com and OkCupid. "But we're constantly trying to build new startup-y stuff at Match, and this is a product that we started working on late last year with the team in L.A., and it popped." In Yagan's view, it's the user experience that has hooked people. "News Feed is one of those things that comes to mind, that has now become ubiquitous. Instagram had some UX attributes that made it addictive. Tinder has that," he says. Tinder declined to release download figures but claims 58 million matches have been made, out of 5.8 billion ratings. Co-founder and CEO Sean Rad claims he's heard of 20 engagements resulting from using the service.
There have been a number of similar apps and websites. Bang with Friends is aimed at those interested in having sex; Coffee Meets Bagel books a lunchtime date; Kisstagram is a contemporary "Hot or Not" based on Instagram. Some have created controversy, and Tinder itself has achieved its success as what could be called a "hookup" app. (Rad rejects that term.) "My experience has been that when I'm chatting with a girl on Tinder, we both really know what we're there for," says Matthew E., a 25-year-old student in New York. He estimates he's gone home with 70% of women he's met up with from the app. "Nobody takes it very seriously, and that's what makes it great."
Now Tinder is trying to change that image by adding new features. First, its latest update includes something called Matchmaker, which allows you to connect two friends with an introductory note; they can then chat within the app. While it can be used to set people up romantically, Tinder hopes it also will be used for non-romantic purposes. Another update in the near future will offer up a sort of duplicate version of the dating section, but under a business heading; users will continue to see photos, but they'd be judging people on whether they'd make an appealing business connection. So, you'd see a photo of a man as well as a brief synopsis of his work background; he might be a consultant with McKinsey. Click him, and here you'd see a bit more of his work experience.
Rad insists he doesn't see Tinder as a dating app -- and never did. "The long-term vision," he says, was always "for you to use Tinder to find new people for any purpose." He's aware of the light in which some see Tinder but argues that the app is whatever you make of it: "There are people who just want to hook up and then there are guys who either knowingly or unknowingly are finding a wife. All we do is open up a chat box."
One obstacle to this shift appears to be age; the average Tinder use is 27, many of them in college or just out and uninterested, for now, in making business connections. But users will be able to opt out of the dating part -- the app will be like a two-section bar where you can enter the fray of the singles lounge or stay in the quieter front area with the adults. Rad suggests that people will use Tinder not just for dating or for business, but for anything convenient, like when you're looking for a tennis partner: "Is the 60-year-old grandpa going to use Tinder? Well, I think it just comes down to, did his friend find a tennis partner on there."
Even Yagan sees Tinder as a dating app, for the moment. "Right now what we know is that Tinder is great for dating," he says. "Can it grow into something much bigger than that? Sure, it's possible. But my recommendation to Sean has been, 'Stay focused on the gold that you struck. If you can go to something bigger and better, hallelujah, but that's much more long-term." Tinder doesn't make any money yet but could, Rad believes, by layering on "premium content" available at a cost. (He says there will never be ads.)
What's next? One imagines Tinder could eventually add buttons that make users' responses even more direct: I Am Not Single But I Get a Thrill From Using This; I Am Single And Looking for a Relationship; I Purely Want to Have Sex, etc. As for whether the app's name could take on a more serious association, it's possible, but will be tough. "My friends and I see it as a game," says Julianne Adams, a 21-year-old college student in New York. "Considering its superficial foundation, I hope Tinder never becomes a hiring tool."
Dating sites exist for all interests - from mullets to bondage - but few users realize many niche destinations are part of much larger enterprises.
By Anne VanderMey, reporter
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Fortune's curated selection of tech stories from the weekend. Sign up to get the round-up delivered to you each and every day.
* Yahoo (YHOO) has three new directors: former Fox Broadcasting Network Chairman Peter Liguori, American Express (AXP) Chief Marketing Officer John Hayes, and IAC/Interactive Corp (IACI) Chief Financial Officer Thomas McInerney. (All Things D)
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Barry Diller's sitting on some prime, if diverse, Internet real estate. His company, IAC/InterActiveCorp (IACI), owns Match.com, Ask.com, Citysearch, and about 50 other sites that seem like they could create the kind of digital sharefest communities that Facebook and Twitter have built.
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The departure of outsized NBC chief Ben Silverman is the third time that the producer will team up with IAC's Diller.
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