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Notes

As your company begins to take off, a different kind of hard kicks in. Now funding pours in to fuel your plans. It’s now time to build out all the product features that fueled your initial vision. Now your revenue engine shifts into fourth gear, as you find new pathways to the customer, elevate messaging and increase conversion. It’s time for the entire business model to mature. As your employee count rises, the socio-technical operating systems that make up your company (such as accounting, human resources, product development and revenue operations) must tighten up and become more mature. In the beginning, you were a doer. Then you were a coach of doers. Now you’re a coach of coaches. As your CEO leadership role evolves, the thinking competency called systems thinking rises in importance.

Market

Product

Model

Team

I have never met or talked with Whitney Wolfe Herd, CEO of Bumble. I have simply been awed by her accomplishments. What follows was gathered via secondary research.

By the time she was 25 years old, Herd had co-founded Tinder, invented its name, driven its early adoption, left the company under a cloud, won a $1M sexual harassment suit against it, and started Bumble. Six years later, at the age of 31, Wolfe Herd had taken Bumble public in an offering that valued her company at $8B and her personal stake at $1.6B. By that time her initial team of four had become a team of 750, with offices in Austin TX, London, Moscow and Barcelona.

As a founder of the most popular dating site in North America and then the founder and CEO of the second most popular one, Wolfe Herd has certainly established her entrepreneurial bona fides. But more than that, she has sparked a movement that has changed societal norms — bringing greater respect, gender equity and mutual accountability to the search for soul mates.

The story of Bumble teaches us much about company-building. Wolfe Herd began with a bold and counterintuitive vision — that women should make the first move. Then, once she knew her dating app had achieved a value breakthrough, she seized the advantage by listening to her customer, rounding out her vision and investing heavily in product development. She adopted a product-led growth (PLG) mindset, continuously testing and iterating on existing features while introducing new vision-aligned features. By so doing, Wolfe Herd led Bumble through the Minimum Viable Scaling stage with clear eyes and a steady hand.

In the wake of her painful Tinder exit and subsequent lawsuit, Wolfe Herd was sure she had put the dating app sector behind her for good. As she pondered her next move, she envisioned creating a women-only site focused on positivity — an Instagram for female friendships. She even had a name for it — Merci. But then, out of the blue, she was approached by Andrey Andreev, an acquaintance from her Tinder days. Andreev was CEO of Badoo, the leading dating app in Europe, which he had launched in 2006 with a freemium monetization model, an innovation at the time. Andreev had been impressed with Wolfe Herd ever since their first meeting. Over a series of conversations he convinced her to get back into the dating space. He invested $10M for a 79% stake in the new company. Wolfe Herd owned 20%.

It was a bold move. 90% of all dating startups fail. But Wolfe Herd knew that her own experience in the space and her affiliation with Badoo would deliver many immediate benefits. Badoo had spent eight years figuring out what worked and didn’t work via constant A/B testing. Furthermore, the company already had in place the technical infrastructure to support a fast-scaling dating application. These advantages reduced time to market, and helped her to avoid many early mistakes. She emerged from the Immerse and Ideate stage of company-building with more clarity than most.

Wolfe Herd’s tenure at Tinder, along with her personal dating experience, had taught her that something was broken in the world of online dating. The Internet had created global connections, but had also spawned a dark side. Behind the anonymity of online profiles, respect and good manners had all too often given way to lewd photos, shaming comments, harassment and hurtful power dynamics. It was all too easy to “catfish” — to present a false profile. And the leading apps, most prominently Tinder, seemed to promote a hookup culture over lasting relationships.

For the people using these apps, especially many women, the entire experience was anxiety-inducing. For some it was soul-crushing. Female users of Tinder reported a decline in self-esteem, and a greater dissatisfaction with personal appearance.¹ A study by the Anti-Defamation League found that 44% of American adults had experienced online harassment in the past year. ² As she conducted more research, Wolfe Herd was surprised to learn that negative events and their resulting impacts were being experienced not just by women, but also by men. Everyone was unhappy with the state of online dating.

She realized that a big part of the problem was that the move to online dating had disrupted long-established behavioral norms. In the online domain, there were no rules. In a 2018 article in Texas Monthly, Wolfe Herd said, “I don’t know why the leaders of social networks have overlooked the idea of rules… Humans lose their kindness gene when they hide behind a screen.” ³ She would create a site that maintained rules to promote kindness, respect and accountability.

For Wolfe Herd, the Minimum Viable Concept came quickly into view. One night in a brainstorming session with Andreev, she came upon the idea that put Bumble on the map. Wolfe Herd knew that the key to success would be to attract women to the platform. She said, “What if women make the first move, send the first message? And if they don’t, the match disappears after 24 hours, like in Cinderella, the pumpkin and the carriage? It’d be symbolic of a Sadie Hawkins dance.” ⁴ Andreev agreed. After trying out a series of names they landed on Bumble.

They quickly hired two former Tinder execs, Chris Gulczynski (back end) and Sarah Mick (design) to lead development. With Badoo’s infrastructure already in place and available to host Bumble, the initial product took just four months to build. Initially, users needed to sign up through Facebook. The app went live on the Apple App Store in December 2014, and in its first month it landed 100,000 downloads. Wolfe Herd knew right away that Bumble would be a hit. The pace of growth and the level of user engagement significantly exceeded Tinder’s early adoption and engagement rates.

Bumble hopscotched quickly through the stages of Initial Product Release, Minimum Viable Product, Minimum Viable Repeatability and Minimum Viable Traction. Women flocked to the free site, thankful to have a solution to their gaping problems and screaming needs with online dating. And the women attracted the men. As she did at Tinder, Wolfe Herd traveled to colleges and universities, crashing sorority houses and talking up Bumble. Once she had enough sorority sisters on the app, she would run over to the frat houses to bring in the guys.

A 28 year old Bumble user and software engineer, Bryan Oltman, was asked why guys like the app. “Because girls like it,” he said. “And girls like it because it gives them more control over the conversation than other dating apps.” ⁵ In early promotions and public relations, Wolfe Herd described Bumble as a “safe and respectful community.” Bumble incentivized kindness.

The pace of growth soon accelerated, propelling her into the Minimum Viable Scaling stage. A company progresses through this stage in six steps:

The business has begun to take off. The monthly count of newly acquired customers is on the rise. Existing customers are happy. Things are looking up. All the more reason to take a time out: to go back to the Four-Way Fit Spreadsheet so you can update claims.

Your actions to optimize the business model, and your product roadmap choices are critical at this stage. This return to the big picture helps you to reconfirm that your assumptions are comprehensive, integrated and internally consistent. Completing the spreadsheet helps you sort out which claims must be tested, in what order; and which ones (the settled assumptions) can be immediately acted upon.

By early 2015, just half a year since Bumble’s launch, half a million users were sending 200,000 messages a day on Bumble, with the number growing 15% a week. 60% of matches were turning into conversations. The company had just six employees in Austin (five of the six were women), plus a team of product managers and engineers mostly in Moscow. The Minimum Viable Scaling stage was underway.

Wolfe Herd’s understanding of the Market had proven spot on. Bumble tapped into a massive unmet need — to bring kindness, respect and accountability to online dating. She soon realized that she had created more than just an app — she’d sparked a movement, one that had the potential to evoke new social norms in dating and contribute to gender equity in relationships.

As time went on, new insights emerged about the Market and its key segments. Ninety percent of all users were between the ages of 18 and 40. The Bumble team was dedicated to customer listening, and so it’s not surprising new pockets of unmet needs were uncovered. For instance, the requirement inside the Bumble app for the woman to initiate communications with a match within 24 hours was not initially reciprocal. This enabled men to “ghost” women who had made the first move. In the first version of the product, a man could sit on the woman’s first communication for an indefinite period of time. Women didn’t like that. Furthermore, catfishing was an early problem, as were sketchy photos. These problems undercut the goal of respectful and accountable communications.

Insights such as these led the Bumble team to update the Product road map with a series of planned enhancements. As Bumble did, smart companies focus extensively on the user journey at this stage. Starting with the first mile, teams adopt a product-led growth (PLG) mindset — continuously testing, iterating and optimizing the user experience.

By 2016, the Bumble business Model had been established. Pricing was based on a freemium model, leading to paid subscriptions. Users could access premium features that enabled more filtering and engagement capabilities. The team began to think through the pricing tiers and packages. Unit economics approached a best-in-class threshold. Customer acquisition had been driven primarily by viral effects; now the team began to develop a plan for more aggressive paid online marketing and event marketing. Wolfe Herd saw the emerging power of the Bumble brand — focused on women, who were encouraged to “Make the first move”. She sensed it could become a powerful source of sustainable competitive advantage, and so she invested in thoughtful development of the company’s brand identity architecture.

As Bumble grew, so did the investment in the Team — especially in the product development domain. To maintain alignment as the company scaled, Wolfe Herd evangelized a set of core values that would anchor the Bumble culture. Here is the description of these values as shown in the company’s 2020 SEC registration statements in advance of its IPO:

Bumble had a jump start in establishing domain-based product development squads. It was yet another benefit of the affiliation with Badoo. With Badoo’s technical teams already well entrenched at Bumble’s founding, and with the infrastructure already built out, the path to technical maturity was faster and easier than for most startups. The Badoo partnership has been a gift that keeps on giving. For instance, a video chat feature that took six months to develop at Badoo was migrated into the Bundle app within two months.

In its SEC filings, the company highlighted its technology as a differentiating advantage. The infrastructure has been built to enable domain teams to have complete responsibility for a given domain. This enables the engineers and product managers within technical teams to be engaged from ideation through launch and beyond, focusing on business outcome objectives. These teams are committed to disciplined agile delivery; live updates occur weekly on the mobile app and twice daily on the back end. Data is fuel at Bumble. Teams are provided with performance metrics, enabling them to be accountable to the business outcomes they deliver — not just the releases they execute. The roots of these product development methods, engineering culture and commitment to data-driven decision making emerged early.

About half of all Bumble employees are engaged in product development. It is an indication of how important product development is to the company.

Now that Bumble had proven to be a hit, the to round out the product — to fix, finish and fill — continued apace. This work was guided by its value proposition: “to create meaningful connections and healthy relationships for everyone.⁷” To pursue this value proposition required maniacal attention to every step of the user journey. And in order to have data visibility into every step, the data infrastructure needed to integrate the data flowing from top-of-funnel marketing initiatives, all the way through the user journey inside the product, and into the accounting and operational side of the business. This end-to-end integration was necessary to ensure everything could be tracked: from discovery to adoption; from free to paid to cancelled user; and everything in between.

Clean-up work was needed, such as the fix that required the man to respond back to the woman within 24 hours, just as the woman was required to do in her initial message. This increased equity within the app.

Another focus area early on was respect. Wolfe Herd was adamant that Bumble users stay within the guardrails of kindness and decency. Before the app was capable of automatically flagging misogynist comments, the team kept an eye out and flagged them when they could. One Bumble blog post publicly addressed a miscreant who had violated policy; it was a reminder to all that this was a different kind of dating site:

“Dear Connor, It has been brought to our attention that you lost your cool on one of our female users, Ashley…. Consider yourself blocked from Bumble⁸.”

The clean-up work to create a user experience that was respectful, accountable, and equitable was a major product priority in 2015 and 2016.

The end-to-end data infrastructure yielded a continuous stream of insights into feature use and user experience bottlenecks. And the company’s commitment to customer listening yielded new opportunities to advance the values of respect, accountability and equity within the product. Meanwhile, Wolfe Herd had made significant investments in product and engineering resources, enabling a faster cadence of feature development.

The result was a cascade of new features. In 2015 and 2016 alone, here are some of the features that were launched:

These improvements to the app were well received. In 2016, a study showed that 49% of users went on the app daily. Bumble was being swiped 10 billion times a month. The app was the second most popular in the iOS App Store. 85% of users indicated they were looking for marriage or a boyfriend or girlfriend, and 25% had gone on a first date with someone they’d found on Bumble within the previous month. Furthermore, the focus on safety was paying off. Bumble reported that their abuse report rate of 0.0005 percent was best in category. In early 2017 Bumble was valued at $1B.

Bumble introduced paid subscriptions in 2016. By 2017 sales had crossed $100M. More than 10% of Bumble users were paying $9.99 a month for features that, in the words of Bumble’s SEC filings, “increases the likelihood of developing meaningful connections”. At 10%, Bumble’s ratio of paid subscribers was double that of Tinder in 2017, according to the investment firm Jefferies⁹.

The Bumble Boost subscription plan offered 1-day, 7-day, 1-month, 3-month, 6-month and lifetime packages. The plan enables users to enjoy Beeline, the feature that enables subscribers to see potential connections who have already indicated interest; Rematch, which enables the user to retrieve and reactivate expired matches; and Extend, which allows 24-hour extensions for conversations. In 2017, Bumble introduced SuperSwipe, which is a paid add-on feature that enables a user to communicate an extra level of interest to a match.

Due to the viral nature of the app, Bumble’s unit economics have always been strong. In its SEC filing, the company indicated that only 21% of new users came from growth marketing investments. The payback period on marketing spend was just three months in 2019.

The result is profitability and rising cash flow. Bumble revenue in 2018 was $162M and grew to $276M in 2019, a 70% growth rate. Rapid revenue growth combined with high gross margins and moderate customer acquisition costs means growing profits. With EBITDA margins in the 20% range, profits grew over 50% from 2018 to 2019.

Its strong unit economics and solid cash flow enabled Bumble to make strong and rising investments in growth marketing. The company’s investments in data infrastructure have enabled marketing leaders to track the performance of dollars spent, and to continuously optimize the choices of channel, message and format for all campaigns. In 2017 Bumble crossed over 22 million registered users, a 70% year over year growth rate. This user count was close to half of Tinder’s user count, and since Tinder grew just 10% the gap is closing rapidly.

In the building of sustainable competitive advantage, Wolfe Herd placed a major focus on the Bumble brand. In that Texas Monthly article published in early 2018, she said, “Bumble is not a dating app. Bumble is a brand that empowers women and empowers men to respect women.”¹⁰

As the company stated in its SEC filing: “We believe that there is a significant opportunity to build on our foundation as a technology platform centered on women to become a preeminent global women’s brand. Wherever women go, we can go too.”

The Bumble competitive moat has also been strengthened by network effects; the rise in users creates more local density, which increases likelihood a match will turn into a relationship, which attracts more users. It also benefits from the cornered resource of the Badoo affiliation, now a part of the same overall company. And its technical capabilities deliver systems power, a persistent advantage especially over older dating apps such as eHarmony.

Wolfe Herd guided the company through the Minimum Viable Scaling stage by focusing on the foundations for growth. She built out the technical and data infrastructure, and developed a mature and high-productivity system of product development. She also tended to back end operations, establishing end-to-end visibility so as to give teams the information they needed to continuously improve. She worked to build a culture that aligned with the values embedded into the Bumble app: growth, initiative, honesty, kindness, accountability and inclusion.

In 2019, Badoo founder Andrey Andreev sold his stake in Badoo and Bumble to Blackstone Group at a company valuation of $3B. Shortly thereafter, Wolfe Herd was made CEO of the combined company, which was renamed Bumble. She brought in a president and CFO to help her manage the fast-scaling business. Today, Bumble is a public company seeking to take over the world. It has 42 million active users, is expanding internationally, is highly profitable and continues to grow at a brisk pace.

Between its Minimum Viable Scaling stage and today, Wolfe Herd has remained focused on bringing the product closer and closer to her vision. As the company stated in its SEC filing, “Our obsession with every detail in the user journey drives our hyper-focus on continuously developing new features that keep the user experience fresh, fun, engaging and impactful…. We especially emphasize product and feature development geared towards women on the Bumble app.”¹¹

The pace of product enhancements has remained consistent in the intervening years. More safety features have been added. Now a user can exchange texts of photos with a match, hold a contact-data-private voice conversation, conduct a video chat, exchange GIFs, and be called by a bot to check in during a date. All built to empower women to take the lead in building healthy relationships. Now users can match anywhere in the world, and can pause their subscription without losing data, and many other user-friendly features.

All of these moves have been brand-true, reflective of Wolfe Herd’s clear vision. As said in the Bumble SEC filing:

“The Bumble brand was built with women at the center — where women make the first move. We are rewriting the script on gender norms by building a platform that is designed to be safe and empowering for women, and, in turn, provides a better environment for everyone…. We believe there is a significant opportunity to extend our platform beyond online dating into healthy relationships across all areas of life: love, friendships, careers and beyond. By empowering women across all of their relationships, we believe that we have the potential to become a preeminent global women’s brand.”¹²

Bumble is a sterling example of a company that moved through this Minimum Viable Scaling stage well. The single biggest factor in its success was and is its CEO: Whitney Wolfe Herd. In the beginning, she leveraged her personal experience and affiliation with Badoo to increase speed to market and to release an initial product that was instantly close to the sweet spot. She built on that early advantage by an unwavering vision and commitment to her woman-first brand. And early on she realized Bumble is much more than a dating app: it’s at the center of a global movement towards a more gender-equitable world.

As you exit your Minimum Viable Scaling stage, your company will be accelerating into high gear. It is a transformational moment; if you execute well your path towards global domination will clear. With success, the questions become more interesting. Which leads us into the next stage — the Minimum Viable Expansion stage.

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