Bumble, Online dating application, Initial public offering, Whitney Wolfe PO: Everything you need to Know

5 billion dollars worth of bitcoin. It is monday february 8th. This is the piper rundown. We analyze business and culture to help you win today’s. Rundown is presented by jetstore. Jetstore has been providing affordable, reliable and easy to manage data storage and cloud solutions to over 4 000 customers worldwide for over 26 years, that’s longer than i’ve been alive. Jetstore offers solutions for private cloud, hosting video surveillance, internet of things, ai machine learning, edge computing data, archiving hpc, media production, medical imaging and flight simulations for more details visit Thank you for sponsoring the rundown. Our first story today is the dating app bumble. They will be ipoing this week on the 11th, which makes that is a thursday, yes thursday. A very timely ipo clearly planned well in advance because it will be immediately before valentine’s day, which is one of the big holidays for dating apps, obviously, bumble which was founded by whitney wolf heard, who left tinder to try and create uh a different culture. A different kind of framework, uh tinder, notoriously uh oriented just around hookups uh, the the kind of uh goal of bumble, is to be more relationship. Focused um and the kind of killer feature is that the women message first, as opposed to uh inbox, is just being spammed by dudes um. The austin based company is aiming for a valuation between six to eight billion dollars, given the frothiness of tech, ipos generally uh the apparent appetite for the market, i would expect that to price on the higher end of that range, potentially even above it, but who knows It is the number two uh dating app in north american markets and its competitor.

Tinder is owned by the match group, which also owns hinge, which is kind of the preeminent player in the online dating space, and their basic message to market is. This is not a a one winner take all market. This is one where there’s ample room for competition and it’s a pretty good position to be number two in the dating market, because that’s not going away anytime soon. 100. I also think that what, with all the virtual dating that has been happening recently, this ipo could not come at a better time for bumble. Um valentine’s day, like you said, will definitely give it that little boost but yeah. I i had a little bit of experience on bumble um. How was the experience? The experience was so actually my sister and i kind of made a game of like bumble, dates and whatnot and and hinge dates, and it was fun like the bumble experience vastly different than the tinder experience. I will say that um it’s it’s, not as relationship oriented as hinge, like hinges tagline, is design. This app is designed for you to delete like that’s the success rate it wants for you, so i think it’s it’s a cool app like it’s, not as gross as tinder it’s, not quite as like serious as hinge. It’S it’s a happy medium, not as gross as tinder as a pretty heck of a tagline. Um bumble has more than 40 million monthly active users um and if you think about bootstrapping a network effect um, you know it’s very similar candidly to like the kind of old like how do you get people into a club model? If you get the women there, the men tend to follow and that’s exactly how bumble bootstrapped such an enormous network effect around 50 million in annual revenue it’s a little chunky little hard to be super precise, because this is actually a spin out of a larger holding Group, which is kind of similar to what match group, is a spin out of iac and barry diller’s enormous media conglomerate, but blackstone brought a bought a majority stake of this company back in 2019 at about a three billion dollar valuation.

So a pretty handsome return uh. When this hits the public markets uh, they had a loss in 2020, but they were able to be profitable in 2019, so that just basically speaks to them, focusing on growth opportunities, but a kind of fundamental underlying capacity to be profitable, which is in question with some Other uh business models like a doordash or an uber or companies like that, and they own 25 of the north american dating market. They are still pretty focused on north america generally as a company, but as we get into the bull in the bear case, that’s partially that maybe potentially the argument for future growth. The other note that we want to point towards is just the business model for dating app. They have paid users who get extra functionality, features within the app ecosystem that saw 19 year over year, growth uh and the average revenue per user for a uh uh. For a bumble, user is 25, which was shockingly high like if you, if you think about uh like facebook, they don’t even monetize their users at quite that same high rate wild. I i do understand the appeal of it like i, i think whenever i first downloaded bumble, i used whatever little free trial or you know it got to see behind the paywall a little bit and yeah the premium, and it is like vastly different than just like. The typical swiping experience you get to see who’s swiped on you, but it’s, nothing, nothing, crazy, yeah! Well, as we get into the bull case.

One of the big notes here is that the 6 to eight billion dollar valuation range that bumble has kind of entered the ipo process with we’re speculating on the higher end. That would only be a nine and a half to a 12 and a half multiple on revenue from a valuation standpoint and match currently trades at a 15x multiple on revenue. So if you were to assume that bumble could achieve eventually the same multiple as match and matches and overvalued, that would suggest that there’s room upward, for you know, forget revenue growth, forget anything else. That bumble has an opportunity to grow from there. The other big effect is the moat that a company like this effectively has uh relative to the competition. It is not only a business with a network effect where the more people that are on the platform, the more value that you’re going to get, but also a situation where creating that network is really freaking hard. No one wants to go on a dating app with two and a half users. Correct yeah bumble definitely has like. I. I think it has the benefit of the girls, knowing that it’s like okay. I might not get spammed with stuff that i don’t want in my inbox, and it also like it holds guys to a certain standard. So user base is popping and once it’s created, it’s it’s, somewhat self, reinforcing and there’s a massive tam. The the total addressable market here is constantly uh regrowing, as people enter the the dating age uh it’s, also churning which, when we get to the bear case, it’s one of the issues um, but it it it’s not going anywhere, and you could even argue that, with The digital revolution, with the growth of the internet, with just changing societal and cultural norms.

You think about certain cultures, where there wasn’t even a dating culture and a tool like this, enabling that to even potentially be possible would that is that is the growth story that i would tell with a service like bubble totally um on the bear side. The flip side is that this is a super high churn and even if the intention isn’t quite there well, one of the issues is tinder and a bumble, don’t necessarily maximize their revenue by optimizing for those long term relationships. So one of the uh potential cultural touch points is if just culturally people move away from a direction of hookups towards uh. You know a general aspiration towards those long term relationships and they’re not serving that need they’re going to get churned off of or, conversely, if people are turning off the service because they’re in a happy relationship, they’re not gon na, be paying for that premium. Uh service anymore, so there’s there’s a little bit of odds there and then the other side. If you think about you know, no one’s gon na people are gon na turn off facebook, because um zuckerberg’s, a jackass or they’re molesting your data or they’re facilitating uh civil unrest, but they’re, not gon na turn off, because they’ve aged out of its utility right they’re. Still gon na see it as a way to see the photos of friends and family hear what’s going on in their lives and that’s the same with most other social networks.

This one does have an inherent churn to it, which makes the hard earned network effects less less solid, in the sense that, if, for whatever reason, tick tock turns into a dating app or some ar vr experience, that isn’t predicated on swiping on a phone becomes the Preferred method of getting a data online they’re going to have to either adapt quickly to that or potentially lose that hard earned network effect to a competitor that just used a different modality for allowing online dating to occur so that’s that’s, where the like long term growth Story, the the predictability of you know: google’s future profits or facebook’s. Future profits feels a very solid in comparison to a service like bumble i would agree. I think that the dating apps in general are, while you download a dating app for a specific reason, whether you want to hook up with someone whether you are looking for a long term relationship. None of the dating apps tinder has kind of played with this model. I think, but none of them have really adopted a content model that i think would be attractive to users like you, set up your profile and then it’s just you can update it if you want, but in this age of digital media and uh. Just everyone is a content creator. I think that there’s an opportunity for bumble to become more of a steward in the sense that, like yeah, we are actually a social media platform now and you can post to a feed, as you would a like.

An instagram feed and just spend more time on this spend more time on the platform that’s. What that’s the whole attention game i’ve, obviously been out of the game a while. Can you post videos to any of these platforms, or is it only photos? I think you can post videos to tinder you. Can you can okay, because that is yeah an amazing opportunity for some jackassery, at least from the guy’s perspective it’s, like just a video of how many push ups, i can do yeah. I don’t know about bumble but i’m, pretty sure you can on tinder um yeah interesting i’m surprised that isn’t more of like a like a internet meme of like yo. Look at what this person posted as a video game. But maybe they kind of secure that a little bit i don’t know so. That’S what’s interesting is like you’re there’s, no yeah yeah. You can screen record and i think there’s a level of like some people when they’re dating they just want to be more discreet. They they don’t, want to, like i don’t know, it’s it’s, a weird thing to navigate facts. Um topic number, two speaking of navigation. It was announced actually this morning and in any other instance, this would be our lead story, but we had already prepped for the bumble. Ipo and we decided to make that story number one story: number two is tesla uh, releasing an sec filing that they have added 1.

5 billion billion dollars worth of bitcoin to their balance sheet. This is not the first fortune, 500 company to add bitcoin to the balance sheet, but while micro strategy and square are both uh, not only have added considerably less but are certainly lower profile than tesla, which, for better for worse, is highly controversial, is uh very, very Highly valued and is definitely a headline grabber, since this news broke, bitcoin has already hit its all time high at the time of this recording it hit forty three thousand seven hundred dollars uh when the previous high was a forty two thousand something um. I would expect this to propel it all the way. 250K. If you look at the charts, there was some technical resistance right around that all time high. Once you blow through that um there’s, a very high likelihood that we see it fly all the way up to 50k or beyond um, and it is once again we can probably even insert the clip here’s the framework. If uh three fortune, 500 companies have added bitcoin to their balance sheet, do you think that the future looks like zero? It looks like three or looks like potentially more than three um and if you think that it’s more than three, then that is a gen general uh, bull signal and um, then again, not financial advice make your own financial advice ever that’s, not our job um. Speaking of people, giving financial advice and potentially getting in trouble, roaring kitty, keith gill, uh known within the subreddit wall street bets as deep value uh is under some investigation by uh financial regulators for holding a license as a registered broker with the company mass mutual while Making a series of videos and posts stating his investment thesis for gamestop preceding the explosive run up in value that that equity had over the last two weeks.

Um i’ll be honest. This pisses me off a little bit um i figured it would. This is not the bad guy like we need our regulators to protect us from deeply sociopathic, malevolent actors in all arenas of life, but in financial markets that’s. What we need our regulators to do 100 companies like citadel that take no risk make billions of dollars worth of profits are much more in need of intense regulatory scrutiny. Questioning transparency. However, our former fed chair ben bernanke works for citadel. Janet yellen has been paid. Hundreds of thousands of dollars for multiple speaking engagements in the brief stint that she had between being the fed chair and now being the treasury secretary um, so the likelihood that they would come under regulatory scrutiny is insanely low and instead, a regulator who, once again trying To build their own profile, as we’ve seen in billions, can get a win here like this. This is a guy that has millions not uh multiples of billions and might be able to hire some lawyers, but they do have the wherewithal and the capacity to crush an entity like this and rack up. Another win for their personal resumes uh. When this is not the person endangering anyone, in fact, for 18 months, if anyone in that subreddit had taken his advice and uh understood his investment uh thesis, they would have actually the the you know, joe six pack average person out there would have made a spectacular Profit on the advice that he was giving out, uh massmutual has uh let gil go, which hopefully is okay, because he will be able to retain what he made on this investment um and not have to work, but it um.

It pisses me off that that is where our tax dollars are going it’s, protecting us from a guy making videos about an equity that he likes in his basement and calling that any sort of uh doing right by the consumer yeah. It sucks bummer of a situation but we’ll, see we’ll, see how it plays out after show, optimism let’s end on a point of optimism: cool um. Well, we both called the game correctly yeah and i won the uh biggest bet that i’ve ever placed on a sports game really yeah, no way good for you, congrats pretty hyped um had an amazing charcuterie board too. While i watched the game so it was like just racking up wins racking up. Dubs yeah had some good guac, always a fan of guac and football. I saw some satires, like over 100 million pounds of avocado are eaten during the average super bowl. What that’s? If you think about it ridiculous, i don’t know how to do that math, but there’s, like whatever million view, how much, how much, what weight of avocado do. You think you personally consume when there’s guac, like over three ounces. I don’t know how much an like an avocado weighs like close to a whole avocado, but it also depends on the size of the avocado because like but just one avocado, you don’t think you could eat like an avocado and a half. I probably could, but i don’t think that i did okay yeah well now, i’m.

Second, guessing my the weight of avocado that i consume like like if it was just if it was just you and kate yeah and you made guac with three avocados wouldn’t that bowl be finished, it probably wouldn’t. Oh damn yeah well there’s, also like a spread of other there’s, a spread of other food, but there’s block there’s block there.

What do you think?

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