Dr. Warren's Lonely Hearts Club

EHarmony sheds its mom-and-pop structure, setting the stage for an IPO

Dr. Neil Clark Warren wasn't the first to think of matching the lovelorn online. "We were the 3,000th," jokes the 71-year-old founder and chairman of eHarmony. com Inc. But back in 2000, Warren, a University of Chicago-trained psychologist who had counseled couples for three decades, wanted to play matchmaker himself. Other sites let serial daters troll their listings. Warren created a 45-minute-long personality quiz that makes matches based on the answers and doesn't encourage direct communication until after the would-be lovebirds respond to even more queries. "Women love it that on our site, guys have to answer 436 questions," he says.

Warren's lonely hearts club clicked. EHarmony is now celebrating its sixth year, with traffic on its site rising 8% in December, to 1.3 million visitors, according to Nielsen//NetRatings (NTRT ). Subscribers pay up to $59 a month for the service, which Warren claims resulted in 16,000 marriages last year, based on a Harris Poll conducted on eHarmony's behalf. Warren -- gray-haired, neatly dressed, well-spoken -- has become a familiar and, he hopes, reassuring presence on radio and television, thanks to eHarmony's $80 million annual advertising budget. He was even lampooned on Saturday Night Live last year in a skit about a dating site for narcissists called Me-Harmony.com.

Now, though, other dating sites are taking a similar approach to wooing the lovelorn. Dating industry leader Yahoo! Inc. (YHOO ). Personals has also developed personality tests that put like-minded members together. And IAC/InterActiveCorp's (IACI ) Match.com is offering dating advice from TV's Dr. Phil McGraw. Warren declined to provide information about his site's financial health. But the increased competition comes as growth in the half-a-billion-dollar-a-year online dating industry has slowed to 6% from 70% a few years ago. "It's a sign of maturity of the category," says Nate Elliott, online dating analyst at Internet research firm JupiterResearch (JUPM ). "The curiosity factor is mostly gone."

And with that initial infatuation over, Warren is hoping to take his relationship with eHarmony's members to the next level. On Feb. 6, he introduced a new online service designed to help married couples stay that way. He also severed some family ties at the company. Last year, his wife of 47 years, Marilyn, gave up day-to-day duties as head of public relations. She remains a consultant. And on Feb. 1, Warren's son-in-law and eHarmony co-founder Greg Forgatch, 47, stepped down as chief executive, although he will serve on the board of directors. Everyone involved says the departures were amicable.


Making those breaks is necessary, Warren says, if eHarmony is to reach its full potential. His plans include an as yet unscheduled initial public offering to provide funds for international expansion and the launch of new products such as counseling for parents. Besides, he says, working with relatives can be a struggle even in the most well-adjusted companies. "Running a family business isn't the easiest thing," he says. "When you're locked into it every day, you don't want to get together socially anymore." Adds Forgatch, who says leaving eHarmony was his idea: "I got my father-in-law back."

The two had been working together since 1995, when they started a business selling audio and video tapes based on Warren's experience as a marriage counselor. They eventually transformed the company into eHarmony. Warren, a devout Christian, initially promoted the site on fundamentalist James Dobson's radio show, but broke with Dobson last year because he felt Dobson's Focus on the Family organization had become too political.

Warren has always had to dodge criticism that his site is designed to promote evangelical Christianity. Critics contend that he doesn't make many matches for those who profess other faiths. He denies those claims. A couple of years ago, one disgruntled visitor to the site went on Good Morning America and complained that he had been rejected by eHarmony because he wasn't spiritual enough. Warren says that he took one look at the guy's body language and concluded that he was depressed, which would explain why he flunked the personality quiz.

Warren is not a big believer in the idea that opposites attract (even if they do, he argues, they won't last). As a marriage counselor, he says he performed hundreds of "autopsies" on failed relationships and realized that most of the people didn't belong together in the first place. So eHarmony's compatibility questionnaire tries to determine where a potential match rates on no fewer than 29 different personality traits, including kindness, intellect, curiosity, humor, energy level, and sexual passion.

Warren also imposes strict rules on eHarmony. No one under 21 can join, because marriages between younger people are twice as likely to fail, he says. Nor will he allow people on his site who have been divorced more than three times. Warren won't match taller women with shorter men, because he believes that's a difference difficult to overcome in a relationship. And, most controversially, he won't fix up same-sex couples; he finds the issue too divisive.

EHarmony's new service is what Warren calls a "marriage wellness program." Each spouse completes a 310-question quiz designed to determine the relationship's strengths and weaknesses. The course, which costs $239 per couple, includes 20-minute follow-up exercises. Warren says that when he and Marilyn took the test, he found out that she didn't think he shared all his feelings with her. "After 47 years of marriage, how come I didn't know that?" he asks.

Warren has even put his relationship theory to work in the corporate world. When he first met Jaynie M. Studenmund, 51, a former senior executive at PayMyBills.com Inc. and Overture Services Inc., he was sure they would be a good combination. Why? They had so much in common, from their backgrounds to their involvement with their families. "She's well-bred," he says. "We're both from Iowa. Her dad was a senator."

Although he was originally considering Studenmund for a seat on eHarmony's board of directors, he was so smitten that he offered her the chief executive job instead. But she was committed to spending more time with her children and turned him down twice. Finally, after a 3 1/2-hour breakfast meeting where Warren offered to let her work flexible hours, Studenmund changed her mind and said yes. She started her new position on Feb. 1. So far, says Warren, "she and I get along beautifully."

By Christopher Palmeri

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