A company catering to women and led by women has made its 31-year-old female founder a billionaire.
Shares of Bumble, the owner of the dating app where women make the first move, soared 67 percent in its trading debut to $72 (roughly Rs. 5,250) at 1:03pm in New York (11:33pm IST), valuing Chief Executive Officer Whitney Wolfe Herd's stake at $1.5 billion (roughly Rs.10,920 crores).
The listing caps a saga that's both inspiration and cautionary tale for women tech founders. Wolfe Herd capitalised on an underserved market and built a multibillion-dollar company that was in a sense born from one of the most vexing obstacles to women entrepreneurs: sexual harassment.
“Hopefully this will not be a rare headline,” Wolfe Herd said Thursday in an interview with Bloomberg Television, referring to the uniqueness of Bumble's women-led management. “Hopefully this will be the norm. It's the right thing to do, it's a priority for us and it should be a priority for everyone else.”
Bumble's IPO launches Wolfe Herd into a rarefied club of self-made female billionaires. While women make up about half of the global population, self-made women - mostly from Asia - account for less than 5 percent of the world's 500 biggest fortunes, according to the Bloomberg Billionaires Index. Self-made men comprise almost two-thirds of the wealth index.
World's 500 Richest
Of the 559 companies that have gone public in the US over the past 12 months, only two, aside from Bumble, were founded by women. It's the same with blank-check firms, Wall Street's favoured wealth-boosting vehicle of the moment. Women-sponsored SPACs totaled fewer than a dozen, a fraction of the 349 that listed in the past year.
That means women are largely being left behind in what's likely the fastest wealth-creation boom in history. Last year the world's 500 richest people gained $1.8 trillion (roughly Rs.1,31,04,000 crores), yet 91 percent of that windfall went to men, according to the Bloomberg index.
“This is a huge win,” said Allyson Kapin, general partner at investment firm W Fund and founder of the Women Who Tech network. “Whitney saw an opportunity that wasn't being addressed for women and based on her expertise she's made it into this gold mine, not just for her and her team but also her investors.”
Among the numerous impediments to women and other underrepresented groups in the startup world, including people of colour, harassment is one of the most pervasive. A Women Who Tech survey last year found that 44 percent of female founders polled reported they'd experienced harassment on the job, with more than a third of that group facing sexual harassment.
It was harassment in fact that spurred the creation of Bumble. Wolfe Herd founded the Austin, Texas-based company in 2014 following her departure from Tinder, the rival dating app she helped found. The split was acrimonious, marked by a sexual harassment lawsuit Wolfe Herd filed against the company, alleging among other things that she was repeatedly called derogatory names by executives and stripped of her co-founder role since having a “girl” with that title “makes the company seem like a joke.” The suit was later settled.
A monitor displays Whitney Wolfe Herd, chief executive officer of Bumble, ringing the opening bell during Bumble's initial public offering (IPO) in front of the Nasdaq MarketSite in New York, US, on Thursday, February 11, 2021. Bumble, the dating app where women make the first move, is targeting to raise as much as $1.8 billion (roughly Rs. 13,100 crores) from its US initial public offering after boosting the size of the deal.
The experience was formative. She initially wanted to create a female-only social network for women to send each other compliments but ended up focusing on match-making on the advice of Russian tech billionaire Andrey Andreev, the founder of dating app Badoo.
With Andreev's backing, Wolfe Herd created Bumble as a service “by women, for women,” touting it as a place where women were empowered and harassment was rigorously policed. It's become the second-most popular dating app in the US with the help of advertisements bearing tag lines such as: “Be the CEO your parents always wanted you to marry.”
Wolfe Herd took over from Andreev when Blackstone Group bought a majority stake in Bumble's owner at a valuation of about $3 billion (roughly Rs. 21,840 crores) last year. As part of the deal, Wolfe Herd received about $125 million (roughly Rs. 910 crores) in cash and a $119 million (roughly Rs. 870 crores) loan that she's since repaid in full.
“I felt very comfortable handing the baton to Whitney,” Andreev said in an email. “She has proved to be very insightful and innovative in the dating space.”
Wolfe Herd's partnership with Andreev helped her surmount a key obstacle to women-led, women-focused startups: funding. Less than 3 percent of venture capital dollars go to startups founded by women, according to Pitchbook data, a figure that's barely budged over the past decade.
The tendency of venture capitalists to fund what they know and who's in their network sustains the gap. And that's despite evidence suggesting women-led startups actually produce better returns than those founded by men. Studies by the Kauffman Foundation, MassChallenge, and BCG found that female-founded companies generated more revenue and were significantly more capital efficient.
“This isn't about charity, it's about making a ton of money,” said Women Who Tech's Kapin.
Another high-profile listing on the horizon is that of the Honest, a baby and beauty products company co-founded by actress Jessica Alba that's said to be preparing to go public.
Women in the startup world are optimistic about a rising tide. “Whitney's success will help further the case for investing in businesses that serve a female audience or that are founded by women,” said Austin venture capitalist Kelsi Kamin. “It's a super exciting time.”
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