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Bumble Research 8 months 20 hours ago #41

  • dsamraj
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Description

Bumble is a mobile social dating app. Bumble is structured in such a way that women “make the first move” in a dating relationship as opposed to men. Bumble does market the app beyond dating to its “BFF” and “Bizz” platforms. [1]. The “BFF” platform refers to “best friends forever” and thus it is meant for finding casual friends. The “Bizz” platform is for developing professional business relationships and networking similar to LinkedIn. [1] Bumbled was founded by Whitney Wolfe Herd along with lead investor Andrey Andreev (who owned a 79% stake in the business) in 2014. [4] Andreev sold his share to Blackstone at what was then a $3B valuation and left the business entirely, leading to Herd becoming CEO. [5]] While it is was never explicitly stated why he sold his share, there is speculation that it could be related to workplace mismanagement on Andreev’s end that hit the news (see below for more details).

How Bumble Works

The app can be accessed through mobile download, like other apps. Then, one uploads pictures and creates a short profile known as a “bio”. About oneself. It is also possible to link one’s Facebook account and upload photos from there. Once a profile is made, the app uses a person’s location to find potential matches. Filters such as gender, age, and location away are also available. [2] Swiping left indicates no interest in the profile, and thus the profile is dropped, while swiping right indicates interest in a profile. If both sides of the potential relationship swipe right, the female has 24 hours to message and must message first. If she does not, the potential relationship is dropped. If she does, then the male must message in the subsequent 24 hours, otherwise the relationship is dropped. If both messages, a “match” is made. [2]

Business Model

An important question any potential investor would ask is how Bumble generates revenue. After all, the app itself is free to download. [2] Bumble makes money off of premium subscriptions known as ‘Bumble Boost’. ‘Bumble Boost’ offers added features that include the ability to go back on an accidental left swipe, rematch with one who did not respond in the time slot, as well as using a “Super swipe” which shows added interest in the potential candidate. [3] Bumble Boost costs $8/week, $15/month, $30/3 months, or $43/6 months. The price of in app purchases varies based on the feature being purchased. [3]

About the Founder

Herd’s inspiration for Bumble came from the “Utah dating culture”. Bumble who describes herself as a feminist from an early age, said she dislike how the culture was centered around the man in the fact that the man had to “make the first move”, while the woman waited. That said, Herd’s first venture was not Bumble. Out of college she joined Hatch Labs and soon with Justin Mateen and Sean Rad cofounded Tinder in 2012. [4] Herd left the venture after she had a breakup with Mateen who she was dating. Additionally, she filed a lawsuit citing sexual harassment and discrimination during her time at Hatch Labs which led to a private, out of court settlement. [4]

Estimated Market Growth

The COVID pandemic has accelerated the growth of dating apps being used as in person interactions have been limited. Statista predicts a 11.6% CAGR in the market in the period 2020 to 2024, with a terminal valuation of $4.23B. [6]

Firm Growth 

Bumble in particular has seen growth as well. Because Bumble has recently filed for an S-1, more is known about Bumble’s financials than a typical startup. [4] Bumble has an average of 42 million users, with 2.4 million of those subscribed to the premium version. Additionally, Bumble earned $488.9M in revenue 2019 which was a 35.8% increase from its 2018 numbers. Bumbled has generated $376.6 in revenue in the period January 30 – September 30. [8] Notice that this only 9 months, so assuming this revenue is pro-rated, that means Bumbled has a projected revenue of $564.9M for 2020. [8]

Compettitors

Bumble’s 2 main competitors are Match.com, and Tinder. [7] Bumble’s “women make the first move” feature does set it apart from its competitors and would give it a competitive advantage for those who are interested in that feature.

User Verification

Despite financial growth, Bumble faces several challenges. One challenge Is to ensure that those using the dating platform are not bots, ad furthermore a given profile is an accurate representation of the person behind that platform. To handle this situation, Bumble has introduced a “verified profile” [2] feature, which requires users to take a photo of themselves. Still, there are loopholes which some have managed to get through. In a rather high-profile case, a famous celebrity, Grant Bovey, was found on Bumble with his age listed as 46. In reality he was 56. [2]

Workplace Mismanagment Scandal

Bumble’s parent company, Badoo was also plagued with a workplace mismanagement scandal that caused negative PR for the company. In particular Badoo’s CEO, Andrey Andreev, was accused of creating a sexist and racist workplace, along with highly addictive drugs being brough into the workplace. [9] This filing was part of the MeToo movement and was reported by Forbes. Andreev denied the claims, and Herd stated that she interacted with Andreev frequently and had only had positive interactions  with him. [9] There is certainly a bit of irony in all this as Bumble had marketed itself as a female empowering dating platform. While it is unclear whether Andreev was found guilty or how much of the accounts against him were true, as mentioned earlier he sold his stake in Bumble to Blackstone and left the business a few months later. [5]

Indecent Exposure Challenges

Still Bumble, has faced even further challenges dealing with indecent exposure being sent in the initial messages people send to each other on its platform. Bumble currently has an AI detector that will blur out indecent images and provide a warning to the user that does so. [2] The AI tool is reported to be 98% effective. [2] Additionally, under a new law in Texas, sending unsolicited indecent exposure photos can lead to punishment. Herd helped in the efforts of getting the law passed. She is trying to get the law passed in California and hopes one day it will be federal law. [4]

Funding

As of current Bumble still sits at the $3B valuation from when Andreev sold his majority stake in the company. [8] As of January 15, it was reported that the paperwork necessary for an IPO has already been filed for Bumble, and it is expected that Bumble will go public in February. Investment Banks Goldman Sachs, Citigroup, Morgan Stanley, and JP Morgan are the lead underwriters for this IPO. [8]

Conclusion

Bumble will be a very interesting company to watch as it is poised to make an IPO. The company is also at the center of a dynamic market with challenges.
Articles for Further Reading (and in part used to create this post):

[1] (Bumble): bumble.com/en/
[2] (The Sun): www.thesun.co.uk/tech/8072764/bumble-fiv...bout-the-dating-app/
[3] (VIDA): www.vidaselect.com/bumble-boost/
[4] (BusinessInsider): www.businessinsider.com/meet-bumble-ceo-...ad-of-a-dating-app-5
[5] (techcrunch): www.businessinsider.com/meet-bumble-ceo-...ad-of-a-dating-app-5

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Last edit: by dsamraj.

Bumble Research 8 months 20 hours ago #42

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