Just three days before Valentine’s Day, Whitney Wolfe Herd received perhaps the best news of them all – her company was valued at $14 billion. Wolfe Herd, the CEO of the Texas-based online dating app Bumble, saw shares reaching $76 on the Nasdaq, an impressive leap from the IPO price of $43.
Wolfe Herd, who had co-founded rival company Tinder, decided to leave Match Group (now Bumble’s greatest competitor) after filing a sexual harassment lawsuit. Tired of the male-dominated atmosphere and outlook, Wolfe Herd revolutionised the online dating industry through a simple yet effective suggestion: let women decide.
The app operates with the well-known swipe feature, but women must make the first move within 24 hours of a match (unless men have paid for the ‘extension period’); otherwise it disappears.
Bumble uses three modes to shift away from the monotonous ‘casual dating’ experience – ‘Date’ is for dating, ‘Bizz’ for professional networking, and ‘BFF’ for friendships. There is a buzz of excitement in women taking a more active role in their love-life, defying stereotypes of female apathy towards sex on an international scale.
Nowhere has this been more felt than in India, where since Bumble’s 2018 launch – publicised and backed by actor Priyanka Chopra Jonas – the user base has quadrupled to three million. Indian women are not only ‘sending twice as many messages as those in the rest of the world,’ they are also more likely to use at least two of the app’s modes.
Bumble’s launch on Nasdaq seems like the latest proof that Wolfe Herd has found the perfect match of modernity, individuality and attractiveness to make her app stand out in the overcrowded dating market. Although it seems that this Valentine’s Day Bumble fell in love with success, many are still sceptical over whether this love story will have a happy ending.
Plenty of fish in the sea?
The online dating market is swarmed with potential suitors, with over 1,500 apps and just one group dominating (Match Group owns six of the top dating apps by revenue) differentiating yourself is far from guaranteed. Bumble’s unique approach, placing females in the decision-making role, has certainly contributed to its success, but it risks causing its undoing.
On the one hand, it has embraced several feminist ideas, most recently banning users who are body shaming other people. This approach could be paying off, as Bumble has 30% more female members for every male compared to its competitors. The most disproportionate female-to-male ratio, for context, was Tinder where the former making up 78% of overall membership.
This could help Bumble break Match Group’s monopoly by becoming a recognisably denser pool for female counterparts. The ‘female-first’ strategy seems to be creating a safer, friendlier environment for women to seek partners.
This is especially important given that 60% of female users aged 18-34 say they have experienced unwanted attention from someone they have explicitly turned down. This strategy seems to be profitable, as Bumble’s “market share increased from 10% in 2017 to 19% in 2020.”
However, like any early love affair, there seems to be some mixed messages. Firstly, the ‘female-first’ approach can be intimidating for men who fear rejection as they lack any control of initiation – and since 45% of Tinder users are more concerned with “confidence-boosting procrastination”, rather than finding love, this issue exacerbates problems over engagement.
Bumble can seem a daunting experience. Since men make up most of the online dating app market, the inability to attract and retain these users will make it harder to generate revenue through the app’s freemium services.
The added pressure from anchoring success around a niche part of the market (female, pro-active, users) is the credibility and reputation issue. Bumble has already faced two scandals around this issue. Firstly, concerning its inability to screen for sexual offenders (a flaw shared by its competitor Tinder) for non-paying users.
Secondly, Bumble’s sister company Badoo was found to have “hired female candidates based on appearance.” Battling both issues, and preventing further mistakes in similar fields, is extremely important for Bumble to build a respectable and reputable brand that users will feel confident paying for.
Love in Covid Times
Beyond the need to differentiate itself amongst its competitors, Bumble faces the added challenge of preserving comfortable profit margins during and beyond the pandemic. On the one hand, Covid-19 has increased membership and engagement across various online platforms (Bumble’s usage went up by 25%).
If we listen to expert psychologists, the failure “to interact with others when you are lonely leads to negative cognitive, emotional and physiological effects”, suggesting that online dating will remain popular even post-Covid as people retrain their social skills. However, the pandemic is likely to create volatile fluctuations in profits, as people’s finances take an unstable turn.
This is because dating apps expect people to use premium subscriptions to generate revenue (although Tinder has been downloaded over 340 million times, most of its revenue depends on the six million subscribers who use the ‘gold’ services). Considering that Bumble has not yet developed significant non-dating revenue pathways, its capacity to create the structures necessary to avoid profit losses remains uncertain.
Although these are legitimate concerns and hurdles that the company will have to face, the app’s rise and success remain impressive over such a short time. It has become an immediately recognisable brand in a tough market, as it steals the heart of enough investors to make its debut memorable by any standards.