Scaled and Failed #16 – Bumble and Siren

Making a Buzz and Calling It Quits

May 07, 2021

Welcome to Scaled and Failed! My name’s Amil Naik and I’m an aspiring VC and founder at The University of Texas at Austin. I write about startups that scaled and startups that failed to draw insights about the patterns of startup failure and how to avoid them. Everything is clearer in hindsight, so it’s worth looking back.

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TLDR

Today’s Topic: Women-Focused Dating Apps
Scaled: Bumble; Experienced founder with unique insight on how to create a good online dating experience for women and powerful brand alignment has led to Bumble’s current success.
Failed: Siren; Among the first women-focused dating apps, saw good traction but couldn’t plan ahead and ran out of funding as lead seed investor did not complete obligation to the company.
Lessons Learned: Your brand is extremely powerful, and in saturated markets having a differentiated one is a necessity for success. Invest in crafting an identity for your company and align with it in action; consistency will build trust, but betrayal of the brand can have serious negative consequences. The startup ecosystem reflects significant inequity; changing it means putting diverse people in leadership roles at funds, in boardrooms, and on founding teams.

Today’s Topic: Women-Focused Dating Apps

Tinder, Bumble, Hinge, Coffee Meets Bagel; there is no shortage of dating apps on the market to help you find that special someone (or close enough for the night). The business of love has always been booming, and the age of the smartphone has made it easy to access for anyone. With revenue topping $3B in 2020 and great growth projections, it’s no wonder everyone’s trying to get a piece of the pie. Tons of services have popped up with their own take on online dating, ranging from specifically targeted demographics to unique modes of communication. Traditional dating in the United States and many other cultures has seen men take the initiative, starting conversations and “making the move”. As society has advanced, apps skewed towards this mode of traditional dating have shown that they do not always address the needs and wants of women. One niche in this market has centered on apps that focus on empowering women to take the lead; Bumble and its model of having women make the first contact is the only example needed to prove the demand.

Bumble was founded in 2014 and is led by CEO Whitney Wolfe Herd, who became the world’s youngest self-made female billionaire following the recent IPO. The company flips the existing power dynamics in dating to favor women leading conversations and focuses on their needs rather than the default catering to men, who tend to make up the largest portion of the online dating market. Siren, founded in 2013, had similar hopes of empowering women in the online dating scene. It boasted a few differentiated features and was more reminiscent of how Hinge works, but was shut down in 2017 amidst funding struggles.

Scale: Bumble

Among my own age demographic, Bumble rarely needs to be described; everyone has heard of it, knows someone on it, or has used it themselves. It’s synonymous with online dating in the same way Tinder is. Whitney Wolfe Herd, the founder and CEO, was initially a part of Tinder’s founding team before creating Bumble. After facing sexual harassment and a toxic environment, she decided to leave and pursue entrepreneurship with her own vision. It wasn’t a great period of time after; Wolfe Herd faced a lot of online harassment following her exit from Tinder and a settled lawsuit she filed regarding the aforementioned sexual harassment. She initially planned on launching a startup outside of online dating, but after talking with Andrey Andreev, founder of another dating app called Badoo, she decided to build Bumble in Austin, Texas with women in control of the conversation to ensure a safer, friendlier environment for them. With some of Wolfe Herd’s college friends, former Tinder employees, and Andreev (as a partner and early investor) on board, Bumble launched in the App Store in December of 2014. There was a lot of work to be done on the app, but the ball was rolling and Bumble was on its way to becoming a household online dating brand.

Going beyond just a dating app with women in control of the conversation, Bumble has rolled out product features like Bumble BFF in 2016 for making friends and Bumble Bizz in 2017 for networking. This move towards a platform has been a part of the vision of the company as a brand and its ideals rather than the specific dating service it has provided. In line with the company’s mission and brand, Bumble has campaigned to punish unsolicited NSFW images in the Texas legislature, banned guns in profile photos, and enforced strict guidelines around harassment and body shaming on its platform over the years to maintain a positive behavioral environment on the app. Wolfe Herd sums up what Bumble hopes to achieve in society at large:

Do I think by a woman making the first move on Bumble we’re going to solve every women’s issue around the world? No. Do I think it’s a good first step to recalibrate an age-old system that sets us all up for failure, men and women? Yes. Because the Internet has megapower to shift behavior–if you use it for good.

Bumble’s journey has not been without bumps in the road. There was a long legal spat between Match, Tinder’s parent company, and Bumble over patents and trademarks following rejected acquisition offers by Match. Litigation was finally dropped last year after starting in early 2018. Additionally, Badoo’s headquarters and Andreev came under fire following an investigation by Forbes that revealed a misogynistic and toxic work environment. As a result of this, Andreev’s stake in Bumble’s parent company (along with several other dating apps) MagicLab was sold to Blackstone (at a valuation of $3B), with Bumble becoming the parent company and Wolfe Herd at the helm as CEO. Despite these issues, Bumble has continued as a powerhouse of growth, even during the pandemic. This growth and brand power culminated in an eye-popping IPO in February that made Wolfe Herd the youngest woman to take a company public and the youngest self-made woman billionaire. Bumble has emerged as the most serious challenger to Match Group’s portfolio of dating apps, and Wolfe Herd is a great model for any entrepreneurial woman. This quote from a Time piece sums up the spirit of Bumble:

The larger question, she [Wolfe Herd] says, is: “Do you wake up the next day feeling like you don’t have to take sh-t from that jerk anymore?”
This feeling is her product. This is her car, her soap, her baked beans. More than relationships, or friendships, or in-app purchases, Wolfe Herd is selling the feeling of power to the powerless, a sense of order in an online universe that so frequently seems lawless. That means visualizing a better Internet, and promoting a safer version of it. And even if that idealized online landscape doesn’t exist yet, Wolfe Herd will brand it into existence.

Fail: Siren

Just as Bumble was rising to challenge Tinder, Siren was founded by Susie Lee and Katrina Hess in Seattle and also hoped to fill the gap addressing women’s needs in online dating. Rather than a matching service with endless choices and a spotlight on images of women, Siren wanted to recreate the more organic nature of meeting in real life. This was achieved by:

A user’s profile is generated over time through responses to daily questions and video challenges (generated by local cultural icons and businesses) designed to reveal qualities of each person. Lee calls them “conversation starters” that are fun to answer. Examples include “what’s a hidden gem in Seattle?” or, “what did you want to be when you were a child?”

In a similar vein to Bumble, women had to reach out initially if they were interested in a user. Lee described Siren and other apps with a party analogy to draw comparisons with Match.com and Tinder:

Siren is the party where you’ve replied to an invitation that you’re looking forward to, and it’s in a beautiful space. You enter and get a chance to survey the surroundings, then at some point, someone mentions that he just read a piece by Alice Munro, and you love Alice Munro, and then he quips that 22 seconds is about how much time he can focus on reading nowadays, which makes you laugh. And there’s a charge in the room filled with all this civilized flirting.

With that goal in mind, Siren launched in the App Store in August 2014 after about a year of building with five employees and $410k in angel funding. Early in 2016, Siren managed to raise a $500k seed round to push growth forward. Unfortunately, Siren ended up shutting down in April 2017 due to a lack of funding. Specifically, although the company was seeing good traction and a path forward, Lee cited the fact that Blackrun Ventures, the lead investor in its seed round, hadn’t completed disbursement of funds over a year later. This led to an inability to plan for the future due to the unpredictable nature of Siren’s funding situation. Despite the startup’s closure, it was a pioneer in the space of women-focused dating apps and more relationship-oriented online dating services that got a lot of eyes on it despite no investment in marketing. Companies like Bumble and Hinge have gone on to carry those same ideals; in that sense, Siren did succeed in helping online dating break away from traditional standards.

Lessons Learned

Bumble did a lot of things right; it had some great early talent, is targeting an underserved market niche, and has curated the experience of its app to be well-aligned with the company mission. However, its biggest strength has been the investment in the Bumble brand. Wolfe Herd has been credited with much of Tinder’s early marketing success; that expertise carried over to Bumble as the company carved its space in the online dating market. Wolfe Herd maintained a singular focus on Bumble’s brand as more than just a dating app, but an experience that could elicit a certain emotional response. She aspires for Bumble to be like Disney in terms of the sentiment behind products and the feelings they bring forth. Additional features on Bumble’s app, Bumble’s headquarters, Bumble’s public communications; these are all carefully crafted to uphold the brand and sentiment tied to it. Bumble wasn’t the first to the market and wasn’t the first to introduce swiping, but it has quickly risen to be Tinder’s largest competitor. The sheer power of Bumble’s brand has been critical in this success. In saturated markets like online dating, brand may eventually be the only thing functionally separating you from competitors. Make sure that your company has a very clear identity and acts in alignment with it; continuity and consistency are great for building trust and loyalty with users. Breaking trust in that brand promise can be very damaging, however. People should understand if your product is meant for them, and the product should deliver on the promise of the brand to the customers.

I don’t have a great lesson to relay regarding Siren’s failure specifically, so I’d rather spend time on a problem within the tech ecosystem in the spirit of this week’s issue. What can you do if an investor closes but doesn’t deliver, as in Siren’s case? It’s an unfortunate part of reality that a number of factors beyond your control could sink your company, from funding falling through at the last minute to a scandal by a cofounder. Of course, as a woman and/or person of color, those factors become harder to pivot around, making every problem more high-stakes. The goals Bumble and Siren set are important; online dating isn’t the only space with significant inequity. Venture capital and tech more broadly are still lacking significant meaningful representation in leadership by diverse groups, which filters down to exacerbate inequity in the startup ecosystem. The plethora of women and POC-focused funds that have been launched in recent years is progress but is only a small step towards where we need to be. When there is diversity at the funds, in startup boardrooms, and on the founding teams is when we will see the needle move in ways specialized funds and diversity hires can’t achieve across the entire ecosystem. I don’t have the solution for how we get there; there are much smarter, more experienced people than myself planning and executing solutions to this problem (check out BLCK VC, an organization of awesome individuals doing such work). But I do know that we will get there eventually.

Scaled and Failed