Lynnley Browning investigates the financial prospects of Noel Biderman, founder of Ashley Madison, a dating website for extramarital affairs:
Biderman believes his controversial business is simply good business, one that taps a huge market. In a study released last April by the National Opinion Research Center at the University of Chicago, 14.7 percent of married American women and 21 percent of married American men admitted to trysts. “The pursuit of an affair is a biological drive,” Biderman says, “and the preserve of technology has changed female infidelity.”
It has also created testosterone-fueled profits for Biderman, who owns 10 percent of the company. Ashley Madison made $30 million in profits on $90 million in revenues last year, and expects $40 million in profits on $120 million in revenues this year. Members have nearly quadrupled over the last five years, to 12.7 million in the United States and another 8.3 million overseas in 30 countries. Much of the new growth is coming from Japan and Hong Kong, where the company recently launched. (Because [Ashley Madison parent company] Avid Life is privately held, it’s tough to verify Ashley Madison’s financial results, and Biderman says the company’s Canadian investors and board don’t allow disclosure. The company’s auditor, Ernst & Young, declined to comment.)
American investors who get in on Ashley Madison would join a clutch of Canadian hedge funds that have already made a killing, raking in over $90 million in cash dividends since 2009, Biderman says. But like a cheating spouse, those Canadian investors don’t want their identities known.
The Dish 