Bumble Goes Public

image credit: Bumble

published by Chand Bellur
February 15, 2021 at 3:28 p.m.

What is Bumble?

Founded in 2015 by Andrey Andreev and Whitney Wolfe Herd, Bumble seeks to empower women. Online dating platforms, including Bumble, host many more male members than female. At the time of this writing, Bumble users are 72.9% male and 27.1% female. On Bumble, only women can make the first move, preventing a deluge of unwanted messages.

Co-founder Wolfe Herd’s presence in the online dating industry is almost mythical. Although not an engineer or business major, the SMU international studies graduate is often credited with co-founding Tinder. Wolfe Herd’s contributions to Tinder remain unclear. By some accounts, she named Tinder; however, according to Wikipedia, its founders already branded the popular dating platform before Wolfe Herd joined as a marketing representative hired by know-who:

“In August 2012, Matchbox was renamed to Tinder to match the logo, and soft launched in the App Store. Rad brought Justin Mateen onto Tinder as a contractor to lead the launch marketing. He lobbied for his sister and Wolfe to be hired to Tinder to help him as field marketers.”

It remains unclear how Wolfe Herd co-founded and branded Tinder, when the app, with its final name, was already launched in the App Store before her hiring. Additionally, Andreev co-founded Bumble and conceived of its core individuating feature — women making the first move. Nonetheless, media coverage, sourced mainly from interviews with Wolfe Herd, insists she founded and designed the company and app. The facade likely serves to push Bumble’s feminist image. Regardless of motive, Tinder and Bumble’s origins have less to do with Wolfe Herd than one would believe.

There’s also a lot of bad blood between Tinder and Bumble. While at Tinder, Wolfe Herd started dating Chief Marketing Officer Justin Mateen. Shortly thereafter, she rose to the ranks of Tinder’s VP of marketing and eventually labeled herself co-founder, against company approval. Wolfe Herd ultimately exited the company, later suing for alleged sexual harassment. Tinder settled for $1 million, denying any wrongdoing.

Tinder later sued Bumble over allegations of intellectual property theft. The suit contends the female-focused dating platform, comprised of former Tinder employees, borrowed much of its user interface and workflow, including new, undisclosed, and unreleased features.

Bumble Business Model

Bumble’s business model is standard fare for dating apps. The company earns revenues from premium subscriptions, costing $24.99 per month. Although the app is free to use, with a skewed male-to-female ratio, most men get little interaction without premium subscriptions. Given the abundance of men and scarcity of women, male members are likely the bulk of Bumble revenues.

Currently, Bumble is the fourth largest dating platform globally, with Badoo (founded by Andrey Andreev) being the largest. Tinder comes in second place, with Tantan outperforming Bumble.

Bumble Trading Inc. encompasses Bumble, Badoo, and another entity. The combination of Bumble and Badoo under one parent company shifts ownership of both from MagicLabs to Bumble Trading Inc. With a market cap of just under $8 billion; Bumble Trading Inc. is about 1/8th the size of The Match Group, owners of Tinder, OkCupid, Hinge and several other dating platforms.

Bumble’s Growth Stumbles

Statistics regarding Bumble market share, male to female ratio, and other data remain murky, with numbers disclosed by the company being more favorable than conflicting, publicly-available information. Annual membership data seem to show Bumble’s growth stalling, even amid global stay-at-home advisories.

Bumble’s user base almost doubled every year between 2017 and 2019. Growth decelerated between 2019 and 2020.

Furthermore, when categorized into four levels of use, most Bumble users no longer participate. 35% of Bumble members are inactive, with light users comprising 30.2% of its base. Moderate and heavy users account for less than a third of Bumble users.

Between the skewed male-to-female ratio and low activity rate, Bumble’s satisfaction rate remains low. The dating platform’s net promoter score — how many people would recommend Bumble — is remarkably low, at 23. Out of 100 people, 56 would recommend Bumble, however 33 would dissuade others from using it. Compare this to Apple, which has a net promoter score of 72.

A pandemic is as good as it gets for Bumble and other online dating platforms. More users than ever are supposedly flocking to online dating with bars, nightclubs, and even parks closed due to a pandemic. Regardless of this dynamic, Bumble’s growth seems relatively anemic compared to other dating platforms, social media, and video streaming portals.

The Bumble IPO

Seven years after its founding, Bumble went public on February 10, 2021. Shortly after its debut, the stock closed 63.5% higher than its IPO price. Given the amount of hype surrounding Bumble’s public debut, its first-day gains seem appropriate.

Competitors like The Match Group faced much more difficult IPOs during the height of the Great Recession. Its stock only increased 12.5% on its first day of trading, flatlining shortly thereafter. Five years later, however, The Match Group’s stock is performing well. The holding company owns the majority of dating apps used throughout the world.

While Bumble’s first day may seem impressive, putting it into perspective, several recent IPOs outperformed Bumble on the first day of trading. You probably haven’t heard of most of these companies, as they don’t have the PR power of Bumble. They don’t have an artificial, game-changing narrative to excite investors and the public. Instead, they offer better business models than selling subscriptions to a plateauing user base. Investors should decide whether they prefer a polished public relations narrative over solid fundamentals.

Bumble Legal Woes

Some industries are more prone to legal battles than others. Also, some companies engage in unsavory business practices, pushing the law’s boundaries. Bumble’s practices surrounding in-app purchases resulted in a $22.5 million settlement, as the company allegedly renewed subscriptions without user approval.

Another source of potential legal problems surrounds moderating users with paying subscriptions. As it stands, Bumble permanently deletes users who have several months left on their subscriptions without a refund. As with most social media moderation, the rules are vague, and Bumble errs on the side of protecting its “bees”. Furthermore, Bumble pledges to delete the accounts of anyone who “body shames” another member:

“body shaming means forcing your opinion of a ‘good body’ onto others. It can come in the form of sending a message to someone that’s critical of their body or health, or by stating in your Bumble bio that a certain kind of body is unacceptable or undesirable. Body shaming includes fat shaming, health shaming, criticizing skin or hair, thin shaming, unsolicited opinions, and mocking someone’s physical features”

While this sounds like a great idea, combined with Bumble’s refusal to refund subscription fees for banned accounts, it’s another class-action suit in the making. Investors must factor this into the overall future outlook of Bumble Trading Inc.

Unlike social media companies, Bumble subscription fees are expensive, and users often save by purchasing a year in advance. All it takes is for one user to be disgruntled with another for an account to be banned. The company admits to protecting women more than men:

“Women become objects of harassment and misogyny much more often than men and that’s why we should protect them first.”

Bumble retains the subscription fees of deleted accounts, claiming that they’re not responsible for moderation decisions. If section 230 of the Communications Decency Act changes, this could result in even more legal problems stemming from overzealous user moderation. Beyond being sued over refunds, the online matchmaking service could face a legal battle resulting from its heavy-handed moderation practices.

Legal disputes between The Match Group and Bumble may resurface. Both companies sue each other in legal battles as contested and bitter as Apple vs. Samsung. The lawsuits center around intellectual property, as each company sues the other over “innovations”. With eight times the market cap of Bumble Trading Inc., the Match Group could eventually acquire the company and is more resilient to legal actions due to its sheer size.

Bumble’s Race Problem

After George Floyd’s untimely death due to police brutality, many Americans protested against white supremacy. Alongside the people, corporate America embraced the struggle for racial equality to sell more widgets. Like many companies, Bumble revised its user interfaces, App Store and Play Store presence, and marketing materials with a few more black faces. The company also made a few high-profile donations to civil rights causes — a mere pittance, given the company’s resources. All the while, Bumble has done little to address the fact that it enables white supremacy more than any dating platform.

Forbes wrote a lengthy exposé about Bumble’s racist work culture. Co-founder Andrey Andreev treated non-white co-workers with disrespect on numerous occasions. The Russian entrepreneur also bristled at attempts to put non-white people in Bumble screenshots and marketing materials:

“Andreev would complain when he saw too many dark faces on the app—he believed it lowered the value of the brand and made it look cheap, says a former employee who worked on marketing campaigns. “Andrey was always making it clear that white was better,” says the former high-ranking executive. “If someone were to arrive a little bit late to the office and they were Latino or African, he would make comments like, ‘Well, what can you expect,’ as if people who were not white were not hardworking.”

Andreev designed Bumble so that only women can engage men in conversation. With American women vastly preferring white men to any other race, this virtually silences men of color on the platform. Given Andreev’s contempt for non-white people, Bumble’s innovative, women-first feature may be a way to avoid contact with brown and black men. Regardless of intent, it’s clear that Bumble has a serious race problem that public relations has temporarily covered up.

With America shifting to combat racism, Bumble seems to be on the wrong side of history. A risk to investors, it’s unknown whether Bumble can survive America’s desire to address systemic racism. Although it’s unlikely lawmakers will act against the company, they may hemorrhage users as the brand becomes tarnished with its racist past and present.

Bumble’s Feminist Problem

Bumble positions itself as a feminist dating app; however, its magnanimous designation remains self-described. The very idea of allowing women to make the first move originated from co-founder Andreev, who held 79% of the company before selling to The Blackstone Group. Bumble wouldn’t exist if Andreev — a man — didn’t back it and think of its core differentiating feature:

“But Bumble is as much Andreev’s baby as Wolfe Herd’s, and she acknowledges him as her founding partner. It was Andreev who reached out to Wolfe Herd shortly after the lawsuit, suggesting they collaborate. It was Andreev, Wolfe Herd underscores, who pushed for a woman-driven dating app (on Bumble, the woman makes the first move), rather than the social network Wolfe Herd initially proposed. It was Andreev who put up the money, becoming majority owner (he still owns between 59% and 79%, to Wolfe Herd’s 20%).”

Its current CTO, in charge of all technologies, is a man — Ronen Benchetrit. At Bumble, women serve in traditionally non-technical positions, affirming established corporate gender roles. At its core, a dating platform is technology, yet Bumble seems to leave this up to men. This may be due to American women’s reluctance to pursue a STEM education. Beyond public relations and platitudes, Bumble is just another tech company where men do the engineering and women dominate marketing and PR. Bumble’s feminist culture relies mostly on men to write the code and maintain the systems.

 

Working in the Silicon Valley, I know plenty of talented female developers and engineering leaders. Most of them are not American. They’re intelligent, never hiding behind demure roles or using female allure to advance their career. If anything, Bumble seems to affirm the status quo. Men developed and funded the product, while Wolfe Herd serves as an ironic feminist figurehead who got her foot in the door by dating a Tinder marketing exec. Also, given Andreev’s disdain for “dark faces”, hiring a competent, female engineering leader from Asia is unlikely.

Critics have also panned Bumble as being one of the shallowest dating apps. With little space for personal information, women make decisions almost solely based on photos. Feminism often seeks to move beyond physical appearance and body objectification as the sole measure of worth. On Bumble, it’s all about the photos. From a male perspective, Bumble offers photos and the common knowledge that today’s American woman has a profound and inexplicable compulsion to hike.

Wolfe Herd responds to the criticism, contending that on Bumble, women know a man’s career and education. Bumble doesn’t verify these claims, however. Furthermore, judging a man by his looks, education and employment enable traditional women to find men to take care of them. A fair contingent of Bumble users are looking for just that — someone to financially support their family. A true feminist woman isn’t looking for a caretaker. They’re looking for men to connect with, not sugar daddies, breadwinners, or shallow Hollywood-style hunks.

Much of Bumble’s feminist status relies on Wolfe Herd’s supposed business prowess, the bulk of which seems to be exaggerated and fabricated. She doesn’t hold a master’s degree in business administration, which most non-technical business leaders would have earned.

Accounts of Wolfe Herd’s professional career also remain murky. As previously mentioned, one narrative suggests that she invented Tinder. Other information shows that she wasn’t even working at the company when it was branded and distributed on the App Store. There are also claims that she conceived the idea of women making the first move; however, reliable publications attribute this to Andreev. The Badoo founder also funded Bumble and took a 79% stake in the company.

Having worked at a startup, I have the personal experience of working with a late-coming leader who claimed credit for everything. Much like the political elite, they revise their history, conjuring grandiose and magnanimous biographies befitting corporate deities. There’s little to no fact-checking about executives’ backstories, and some of them are pure malarkey. The reality is, many in the corporate world schmooze or employ sociopathy to reach their goals.

Bumble markets its app as a feminist game-changer. In practice, it seems to enable the patriarchy. From its origins, Bumble is an app created mostly by men, with a thin veil of feminism. By focusing on looks over substance, it objectifies its users instead of allowing them free expression.

Post-Pandemic Social Media Crash?

Most of the global population is currently under lockdown due to the pandemic. Even with stay-at-home advisories in place, Bumble’s growth seems to have stalled compared to previous years. With restaurants, bars, nightclubs, and other social gathering places shut down; online dating is the only option for most singles. 

2020 and the first half of 2021 are likely the peak of online dating. For now, people must carefully select partners and perhaps engage in socially distanced dating. Online dating participants use features like text and video chats instead of meeting in person. These practices will soon fade away as stay at home orders rescind globally.

Bumble Trading Inc. Riskier Than Other Opportunities

Bumble is a hot stock right now, but it may be more hype than substance. Spun as a feminist dating app, created by a woman, social innovation is Bumble’s selling point. By implementing a simple use case, preventing men from initially messaging women, the company is only slightly different from the rest of the pack.

Investors should be concerned about conflicts in Bumble leadership’s backstory. By one account, founder Whiney Wolfe Herd branded Tinder and created Bumble, including its “women make the first move” workflow. It’s a familiar story of a woman dating her way to the top in corporate America by other accounts. In this case, she may be taking far more credit than she deserves.

Potential investors could read this murky, “he said/she said” history as a lack of honesty within Bumble leadership. Corporate transparency is already an issue across the board, with some being more honest than others. The smart investor may choose to avoid Bumble, in favor of more lucrative and transparent opportunities.

Like many online dating platforms, business practices surrounding moderation and subscriptions leave Bumble open to lawsuits. Beyond existing settlements, the company’s pledge to moderate to the extremes of political correctness may lead to an avalanche of lawsuits, especially if section 230 of the CDA changes.

The time to invest in Bumble was before the pandemic. People sheltered in place throughout the world is a boon to online dating platforms, yet Bumble shows stalling growth. It’s a crowded field, and it’s unclear whether most women actually want to make the first move. Bumble’s strong PR and marketing could overcome pent up demand to go out in real life and meet people; however, this is unlikely.

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