- Bumble made history in the dating world for its female-focused algorithm that defies traditional gender norms and puts women in a position of power.
- Female leadership begins with CEO Whitney Wolfe Herd and extends to the company’s board of directors and investors including actress-model Priyanka Chopra Jonas and Serena Williams.
- There are now more than 20 female founders to take companies public, but the venture capital and IPO market have a long way to go, as funding to women-led start-ups hit a three-year low in 2020.
When Bumble founder and CEO Whitney Wolfe Herd launched the dating app in 2014, she wanted to solve a real-world 21st century relationship problem: how to find love for the millions of women just waiting around for men. So she turned traditional dating norms upside down, creating an app launched by women, guided by women and for women that defied age-old gender norms by letting the women make the first move.
Nearly seven-years later, the company that prides itself on its female-first approach — and which soared in its opening trade on Thursday after raising $2.2 billion in an initial public offering that exceeded expectations and valued the firm at over $7 billion — has garnered a devoted following. As of the third quarter of 2020, it boasted nearly 42 million active users looking to find love with the swipe of a finger. Now Bumble also can boast about becoming a member of a small but growing list of female-founded companies to IPO, which already includes Stitch Fix founder Katrina Lake and the RealReal‘s Julie Wainwright.
“Every single day we have just gotten up in the morning and focused on building an experience around women, for women,” Wolfe Herd told CNBC’s Squawk Alley on Thursday morning. “When women are safe and happy, everyone else follows and it creates a better relationship for everyone.”
Corporate America and the technology sector have come under fire for the lack of diversity in boardroom and power-wielding positions. Just 6% of companies in the S&P 500 have a female CEO, including General Motors, Oracle and Ulta Beauty, but they’re still in short supply although the number doubled between 2007 and 2017, according to Pew Research Center.
Nasdaq, where Bumble is listing its shares, recently filed a proposal with the U.S. Securities and Exchange Commission which would require all companies in the U.S. Nasdaq Exchange to share diversity statistics pertaining to their board of directors. Goldman Sachs said last month it wouldn’t take companies public if they didn’t have at least one diverse board member.
Venture-capital firms with a focus on funding female-led start-ups have emerged in recent years, including Female Founders Fund, Golden Seeds, and Intel‘s Capital Diversity Fund, which focuses on underrepresented tech entrepreneurs, while organizations including All Raise have emerged to fight these inequities.
“Right now, there’s a flywheel of largely white men funding white men,” said the organization’s CEO Pam Kostka. “We have a boy’s club going on and that power circle is self-reinforcing. What really needs to happen is we need to be the new flywheel.”
Increasing funding to female and minorities entrepreneurs starts by putting them in the boardroom and at venture firms, as investors can attract diversity, she said. But the industry still has a long way to go to attaining equitable funding and it could take years to see results.
In 2020, as U.S. venture-backed start-ups raised record amounts of capital, funding to female founders fell to a three-year low, according to data from Crunchbase. Seeing more “role models” like Wolfe Herd take their companies to IPO can help, said Anu Duggal, founding partner at the Female Founders Fund.
“Often women … aren’t taken as seriously,” Duggal said. “I think what she’s proven is that you can put women first and you can build a huge company behind that.”
Bumble’s board is majority female. Its board has included lawyer Michele Kennedy who launched Peanut in 2017, an app which connects mothers looking to find new mom friends, and boasts over a million users. Ann Mather, who formerly worked as CFO of Pixar Studios and serves on the board of companies including Alphabet, Netflix and Airbnb, joined Bumble’s board of director’s last year.
The company also launched its own fund in 2018 which focuses on early-stage investments to businesses founded and led by women of color and underrepresented groups, with Serena Williams as an investor.
“Our aim is to be another voice calling out for more investment in women-owned businesses and encourage others to take part in bringing amazing women entrepreneurs into the heavily-skewed venture capital ecosystem,” Wolfe Herd said of Bumble Fund in a 2019 interview with the Female Founders Fund.
Wolfe Herd is no stranger to dating apps. Before launching Bumble, the 31-year-old entrepreneur worked at Tinder, the dating platform well-known in Gen-Z and millennial hookup culture, and a tough competitor to Bumble. Shortly after graduating from college, the then-22-year-old joined Hatch Labs, a Los Angeles-based incubator for start-ups run by IAC, where she began working with peers on what later became Tinder, where she served as vice president of marketing.
Face-to-face with #MeToo era issues
Bumble and Wolfe Herd’s history have directly confronted the #MeToo era reckoning. In 2014, Wolfe Herd resigned from Tinder and filed a sexual harassment and discrimination suit against the company and fellow executives. The company reportedly settled for roughly $1 million and stock awards later that year.
During a 2018 interview with TechCrunch Disrupt, Wolfe Herd addressed being a female-focused company amid the #MeToo era. The fact that society has begun to normalize the importance of equality and female empowerment, is something the company was “so excited about,” she said.
“It’s something that we have been waiting for for a long time and fighting for, so it’s a phenomenal tidal wave happening where women feel empowered to use their voice and they’re not scared, they’re not ashamed,” Wolfe Herd said.
After departing Tinder, Wolfe Herd sought to build a competitor to Facebook‘s Instagram geared toward younger generations, according to an interview with Business Insider in 2015. But after connecting with Andrey Andreev, co-founder of a dating app called Badoo, whom she met while working at Tinder, she was convinced to rejoin the dating scene.
With the help of Andreev and some former Tinder employees, including co-founder Chris Gulczynski, Bumble was launched with an initial investment of $10 million from Andreev and Wolfe Herd was named CEO with a roughly 20% stake, according to Forbes. Andreev later came under fire following a Forbes investigation alleging a toxic and misogynistic culture at Badoo’s London-headquarters; he hired an outside firm to investigate the claims and maintained that many of the accusations were “inaccurate.”
Nevertheless, he sold his reported 79% stake to Blackstone Group in 2019, when the company purchased a majority stake in the platform’s then parent-company MagicLab, which valued the firm at roughly $3 billion.
Bumble’s growth, and the rising competition with her former company Tinder, ultimately led to offers to buy out the start-up — which were rebuffed — and a lawsuit involving Bumble and Tinder parent company Match Group. That battle included an open letter that Bumble wrote in response to patent infringement claims, which echoed the empowerment of the MeToo movement in saying to Tinder’s parent, “Dear Match Group. We swipe left on you. We swipe left on your multiple attempts to buy us, copy us, and, now, to intimidate us. We’ll never be yours. No matter the price tag, we’ll never compromise our values. … We — a woman-founded, women-led company — aren’t scared of aggressive corporate culture. That’s what we call bullying, and we swipe left on bullies.”
While she declined to comment on specific challenges she has faced in the past, Wolfe Herd told CNBC on IPO day that “this is a moment that should serve as an example to anybody feeling like they’ve come to the end of the road … there is always an opportunity to get back up and rebuild yourself and reinvent yourself.”
The battle with Match and Tinder
Between Jan. 29 and Sept. 30, Bumble reported revenue of about $376.6 million and a net loss of $84.1 million, slim gains in comparison to competitors like Match, which dominates the dating market with the highest grossing-app Tinder and platforms like Hinge, OkCupid and Match.com, and reported net income of $132.1 million and revenue of roughly $640 million in just the third quarter.
Bumble’s focus on women could limit its growth potential, according to a Wall Street Journal article from September that argued Bumble has “a way to go” in order to compete with platforms like Tinder in the international market.
“The bottom line is the vast majority of dating app users are men and that fact alone makes a platform like Bumble, that are very female focused, inherently market limiting,” the WSJ columnist Laura Forman told CNBC’s Squawk Alley.
In December 2018, backed by actress and Bollywood star Priyanka Chopra Jonas, the platform launched in India, a risky venture given the country’s predominantly negative view toward casual dating. In an interview with CNN Business, Wolfe Herd called places such as India with often “misogynistic” backdrops, “wide-open prairies” for the company.
Bumble has expanded beyond the dating market. Within two years of its inception, it created a friendship-building platform with the launch of Bumble BFF in 2016, followed by networking and mentoring platform Bumble Bizz in 2017. Both offerings build off of the existing swiping algorithm to allow users to build connections, and in the case of Bumble Bizz share resumes or work samples.
Bumble Bizz hasn’t overtaken networking giants like Microsoft‘s LinkedIn, it’s become a platform for recruiters to seek out female candidates for potential roles. In 2019, the company further expanded the offering with Women in Bizz, a feature allowing users to filter out men from potential networking connections. That same year, Bumble launched a partnership with global esports organization Gen.G to sponsor the platform’s first all-female gaming team which included a slew of professional Fortnite players.
Match announced a social platform acquisition outside its core dating app focus on Tuesday.
Amid its short-history, the female-focused company also hasn’t shied away from taking a political stance. In 2018, following a series of mass shootings and calls for gun control nationwide, Bumble banned firearm photos from its platform.
Most recently, the platform banned body shaming. According to a blog posted to the company’s website, this includes language posted via Bumble’s chat function or profile setting. “Body shaming is not acceptable on or off of the Bumble app,” the post read, noting that offenders would be banned from the platform.
The pandemic and online dating
Like Tinder and Hinge, Bumble has seen a surge in users during the pandemic, as lonely singles look to occupy their time and find love during nationwide lockdowns and shelter-in-place orders. Last March, Bumble reported a 23% increase in sent messages in New York City and a 26% increase in San Francisco in just a 10-day period.
Amid Covid-19, it also began offering in-app video to allow users to connect from the confines of their home. Now, users can implement a virtual dating badge which signifies a willingness to date via video call; they can also share audio voice notes and expand distance filters to match with anyone nationwide.
“We are very alienated and isolated in this time and being able to keep the globe a little bit more connected while they have to remain physically distant is everything we’re staying focused on right now,” Wolfe Herd told CNBC’s Closing Bell in May 2020.
Although physical dating will return in the long-run, she added that pandemic is giving users opportunities to spend more time getting to know one another before they “hop into a coffee shop or bar,” which adds to the level safety and security the platform has worked to create since the beginning.
“We fundamentally believe that physical dating is not going anywhere, this serves a real valuable place in people’s lives,” Wolfe Herd said.
WSJ’s Forman called the company’s 70% revenue growth in 2019 “eye-popping,” but argues it’s slim in comparison to Tinder, which grew 138% at the “age equivalent time period.” Women, she added, want to be on the platform where the most men are, and while Bumble’s female-driven first-move could be a “fantasy” for some men, for the vast majority it’s “a tough sell.”
Aside from Match, Bumble also faces potential threats from technology giant Facebook, which recently entered the dating scene with added features to the social networking platform. But Wolfe Herd is unfazed, and called the technology company’s announcement “highly validating” in a 2019 interview with CNBC’s Squawk Box.
“The fact that a giant like Facebook is finally owning the word dating is incredible for us because ultimately that is at the core of what we all do,” she said.
The VC community has a long way to go as it seeks a new generations of Facebook IPOs more diverse than the last one. Females represent only about 13% of decision-makers at VCs, and, while the number is growing, 65% of firms still lack any female partners, according to All Raise.
“I think that the message we’re trying to send is let’s all just respect one another and you can be a successful tech company with big revenue numbers and do something progressive. It’s not one or the other,” Wolfe Herd told NBC News in 2018.
At 31, Wolfe Herd is the youngest female founder to take a U.S. company public on the extremely small list of women founders who led IPOs. She told CNBC on Thursday, “This should just serve as an example that anything is possible and I’m so excited to hand the baton on to the next woman who surpasses me as the youngest woman.”