Ashley Madison: Is infidelity a billion-dollar business?

Noel Biderman (m) says he was inspired to start the site after being a sports lawyer

Noel Biderman sounds like your run-of-the-mill technology chief executive: he peppers his speech with words like "disruption" and of course, his start-up is not just a business, but a vehicle for "societal impact".

"I am making it easier for women to catch up to men," he says of AshleyMadison.com, the website he founded in 2001.

The catch, of course, is that Ashley Madison is the website for cheating spouses, with the unsubtle tagline, "Life is short. Have an affair."

And Mr Biderman, a former sports lawyer who says he was often forced to deal with the aftermath of his clients' affairs, says he is helping women catch up to men not by giving them equal pay or more education, but by allowing them to cheat with just as much frequency as men do.

"There's a lot of brick and mortar business from brothels to escort agencies that cater towards men, so I really wanted to focus on the female side of the equation," he says.

That's why he named the site Ashley Madison, after the two most popular baby girl names in the United States at the time.

Whatever your view on that equality proposition is, his bet that cheating could be profitable seems correct: the company, which lets women use it for free, but charges men fees to create profiles and send messages, notched $150m (£95m) in revenues in 2014, all from subscriptions.

But the big question now, as the firm attempts to raise $200m in a public share sale in London - which would value it at nearly $1bn - is whether or not anyone will be willing to publicly invest in infidelity.

Second time

This isn't the first time Mr Biderman and Avid Life Media - Ashley Madison's parent company, which also runs the websites CougarLife.com, EstablishedMen.com, and TheBigandtheBeautiful.com - have sought a public share sale.

In 2011, the company attempted to list in its home city of Toronto, but was ultimately forced to withdraw its offering when the Toronto Stock Exchange and investors baulked at the proposition.

Mr Biderman chalks the failure up to squeamishness and timing. The site, which is now in 46 countries and has 30 million global members, was only in the US and Canada then.

The site is in 46 countries, and takes in an estimated $150m in revenue, according to Avid Life Media

He thinks London is a better bet because the city is more comfortable with "sin or controversial businesses".

"Business for the most part should have one goal in society - investor return. They're not there for social endeavours," he says.

In other words, European investors might be willing to overlook a few things if the top line figures look good.

And there is some data to back up his pure profits-focused pitch. A recent study by three London Business School economists found that investments in tobacco or adult entertainment business often have higher returns, possibly because other investors shun them and artificially lower their prices.

Another study found that an investment in a "sin stock" portfolio can lead to annual returns of nearly 19%.

Controversial topic

But Mr Biderman acknowledges that public attitudes towards infidelity could still lead the firm to abort its effort.

"I think unfortunately the morality of infidelity is that last bastion - we've gotten comfortable with interracial relationships, we're getting more comfortable with same-sex ones, it's infidelity that has a long history that has to be overridden."

That moment does not seem to have arrived yet - if it ever will.

The BBC contacted more than a dozen investors and analysts to ask for their opinion on Ashley Madison's business model - most did not reply or declined to speak on the record.

"I am not keen to weigh in on this debate, as I know it's a somewhat controversial topic," said one, and most data analytics firms do not track Ashley Madison's traffic or include it in their round up of the world's online dating firms.

Others have questioned the firm's numbers, after former staff and users have complained of a plethora of fake profiles on the site. The company admits many people sign up and never actually do anything - a potential problem.

And of course, there is competition.

Gleeden, a French infidelity service that launched in 2009, says it has 2.6 million members, primarily in Europe, and that it screens its members more thoroughly - offering a "tasteful" alternative to Ashley Madison's pages, which even a casual scan indicates can often be quite explicit.

Legal issues are also a problem for infidelity firms: Singapore refuses to allow any infidelity sites, South Korea initially shut Ashley Madison down, and Gleeden was recently sued in France.

Ashley Madison has competitors, such as European-focused Gleeden and traditional dating sites

Finally, although the company claims it is the second biggest dating site in the world - behind the Match juggernaut - and that its pool of married people is significantly larger than that of singles, the reality is that it still does face competition from traditional dating sites.

A recent study by analyst firm Global Web Index found that more than 40% of the users on the Tinder dating app were married or in a relationship. (Figures which Tinder disputed.)

'Changing tide'

So why ask for outside funding?

Even Manuel Montevidoni, the chief financial officer of Gleeden told the BBC: "From a financial standpoint, as a chief financial officer, I don't understand why Ashley Madison is looking for financing."

But he notes that the firm supports Ashley Madison's efforts, mostly because it brings public awareness to the ubiquity of infidelity - and perhaps, in Mr Montevidoni's opinion, will allow for more acknowledgement of what both firms say is a fundamental aspect of not just married life but human nature.

And for all of his investor prospectus jargon, Mr Biderman admits that it's not just about making money for him - and shakes off articles that have branded him as being "possibly evil".

"We are showing society some newfound data that might make them think differently about laws and monogamy," he says.

"I'm just at the changing tide of our belief around matrimony and sexuality - which is a deeper legacy to leave behind."