Whitney Wolfe Herd's Dating Strategy: From Tinder to Bumble PDF

1/16/25, 3:41 PM Whitney Wolfe Herd’s Dating Strategy: From Tinder to Bumble Page 503 https://prod.reader-ui.prod.mheducation.com/epub/sn_2cf...

1/16/25, 3:41 PM Whitney Wolfe Herd’s Dating Strategy: From Tinder to Bumble Page 503 https://prod.reader-ui.prod.mheducation.com/epub/sn_2cf24/data-uuid-dc30073384e342ccb95edc7384f131c7 1/13 1/16/25, 3:41 PM Whitney Wolfe Herd’s Dating Strategy: From Tinder to Bumble MiniCase 1 Whitney Wolfe Herd’s Dating Strategy: From Tinder to Bumble “There were days where I didn’t want to live … the internet defined me … [people] calling me the most ugly names in the world … but through all of this pain and struggle, I still had an itch to create.... I can start something.... I can change what I hate that I see in the world.” Whitney Wolfe Herd, CEO and Founder of Bumble Inc.1 Whitney Wolfe Herd became the world’s youngest self-made female billionaire with a net wealth of $1.5 billion after taking Bumble Inc. public (in 2021). Wolfe Herd helped start not just one but two of the most popular dating apps: Tinder and Bumble. What was her strategy to become so successful? https://prod.reader-ui.prod.mheducation.com/epub/sn_2cf24/data-uuid-dc30073384e342ccb95edc7384f131c7 2/13 1/16/25, 3:41 PM Whitney Wolfe Herd’s Dating Strategy: From Tinder to Bumble Shortly after graduating from Southern Methodist University, Whitney Wolfe Herd helped transform online dating by launching Tinder and Bumble. An entrepreneur and marketing wizard, Wolfe Herd turned the disappointment and pain she experienced from sexual and online harassment at Tinder into energy and creativity to found Bumble. She turned the old-age dating script on its head: At Bumble, women make the first move, always. Vivien Killilea/Getty Images https://prod.reader-ui.prod.mheducation.com/epub/sn_2cf24/data-uuid-dc30073384e342ccb95edc7384f131c7 3/13 1/16/25, 3:41 PM Whitney Wolfe Herd’s Dating Strategy: From Tinder to Bumble Online Dating Match.com, launched in 1995, was one of the first online dating services. It’s hard to believe today, but in the early days of the internet, people who engaged in online dating were considered desperate, awkward, and maybe a little weird. Today, most Millennials and members of Gen Z (as well as many people of older generations) participate in online dating. In the most abstract sense, dating is a problem of matching preferences in time and space. Pre-internet dating took place in thin markets, meaning the number of potential dates someone could encounter was limited by real-life circumstances such as school, work, and social life. Online dating transformed thin markets into thick markets with seemingly unlimited supply and demand—that is, a large number of potential people to date. Since the launch of the iPhone in 2007, the use of mobile apps has skyrocketed, including the use of app-based dating targeted to many different audiences. Given the low barriers to entry, online dating is a fragmented and highly competitive market space. In 2022, revenues for the U.S. online dating industry were $3 billion, with 44 million people in the United States using the services and 27 million using phone dating apps. Exhibit MC1.1 shows a timeline of the launch of some of the primary online dating services, and Exhibit MC1.2 shows the dating app market share. Combined, Tinder and Bumble hold over 50% market share: With a 30% market share, Tinder is the largest online dating service, followed by Bumble (22%). Whitney Wolfe Herd was instrumental in creating both of them. Page 504 https://prod.reader-ui.prod.mheducation.com/epub/sn_2cf24/data-uuid-dc30073384e342ccb95edc7384f131c7 4/13 1/16/25, 3:41 PM Whitney Wolfe Herd’s Dating Strategy: From Tinder to Bumble EXHIBIT MC1.1 A Timeline of Major Online Dating Services in the U.S. Source: Author’s depiction of publicly available data. EXHIBIT MC1.2 Dating App Market Share in the U.S. (2022) Source: Author’s depiction of publicly available data. https://prod.reader-ui.prod.mheducation.com/epub/sn_2cf24/data-uuid-dc30073384e342ccb95edc7384f131c7 5/13 1/16/25, 3:41 PM Whitney Wolfe Herd’s Dating Strategy: From Tinder to Bumble Frank T. Rothaermel prepared this MiniCase with Veronica Bian, who provided superb research assistance. The MiniCase is based on public sources and is for class discussion. It is not intended to be used for any endorsement, source of data, or depiction of efficient or inefficient management. All opinions expressed and all errors and omissions are entirely the author’s. Revised and updated: July 16, 2022. © Frank T. Rothaermel. https://prod.reader-ui.prod.mheducation.com/epub/sn_2cf24/data-uuid-dc30073384e342ccb95edc7384f131c7 6/13 1/16/25, 3:41 PM Whitney Wolfe Herd’s Dating Strategy: From Tinder to Bumble Tinder Disrupts Online Dating Traditional dating websites such as Match and eHarmony sought to connect users based on hundreds of criteria. In their advertising on Hulu, YouTube, and elsewhere, they continue to highlight their ability to help people form long-term relationships. Launched in 2012, Tinder disrupted the online dating market. Whereas traditional players in the market require new users to fill out lengthy personality questionnaires, the Tinder app asks users to sign up via Facebook and select pictures to feature on their Tinder profiles. By making sign-up fast and frictionless, Tinder achieved two things. First, it increased its user base by focusing on Millennials and Gen Zers, early tech adopters. Second, it removed the frustration of going through so much effort to join a dating site. With access to a comprehensive data set, Tinder offers users more personalized experiences and limits the number of overcurated profiles that often appear on traditional dating sites. Because Tinder is connected to users’ Facebook profiles, the app delivers targeted results by leveraging data on users’ mutual friends and interests rather than bombarding users with random profiles. In addition to Facebook, people can sign up for Tinder with their Google account or mobile number. Tinder relies on geolocation to generate a stream of profiles for a user to “swipe left” on profiles (not interested) or “swipe right” (interested). If both users swipe right after viewing each other’s profile (“double opt-in”), they are alerted to the “match” and can message each other to meet up in person. Users set their geographic preferences; they can choose to see possible matches who live within, say, a 100-mile radius, or they can choose to view the profiles of people from anywhere in the world. Only when users match are they prompted to chat; this system reduces the fear of rejection often caused by the uncertainty of eliciting a response from a random user on a traditional dating site. Tinder users engage in billions of swipes each day across the globe in some 200 countries, and individual users often spend more than one hour a day on the app https://prod.reader-ui.prod.mheducation.com/epub/sn_2cf24/data-uuid-dc30073384e342ccb95edc7384f131c7 7/13 1/16/25, 3:41 PM Whitney Wolfe Herd’s Dating Strategy: From Tinder to Bumble going through hundreds and perhaps even thousands of profiles. This system has some drawbacks: Critics argue that dating has become an online game with judgments made in split seconds based on simple cues: attractiveness, availability, and location. Wolfe Herd’s first foray into the dating app industry started at Tinder, where she served as vice president of marketing. While she did not help to found the company, she was a part of the early time that made Tinder so successful. Tinder took the online dating market by storm, spearheading the dating app revolution. Within a few short months after launch, Tinder had amassed a user base of over 100,000 and created nearly 10 million “matches,” or pairings of users who express mutual interest. Tinder’s rapid growth resulted from its business model innovation and marketing. Tinder’s hugely successful marketing strategy was Wolfe Herd’s ingenious Page 505 idea. She was a recent college graduate and had been a sorority member. She was well positioned to leverage her deep knowledge of the dating scene among college students, specifically in colleges’ Greek organizations. She hosted social events on college campuses, which lit a fire as Tinder grew rapidly through word-of-mouth advertising. Soon, celebrities and influencers were sharing their Tinder experiences. As more users joined the Tinder app, a larger pool of potential dates became available, leading to more matches. As the number of successful matches grew impressively, more users joined, and positive network effects set in. Exhibit MC1.3 shows the ingenious flywheel the marketing wizard Wolfe Herd initiated to supercharge Tinder’s growth. https://prod.reader-ui.prod.mheducation.com/epub/sn_2cf24/data-uuid-dc30073384e342ccb95edc7384f131c7 8/13 1/16/25, 3:41 PM Whitney Wolfe Herd’s Dating Strategy: From Tinder to Bumble EXHIBIT MC1.3 Positive Network Effects: The Dating App Flywheel Source: Author’s depiction of publicly available data. https://prod.reader-ui.prod.mheducation.com/epub/sn_2cf24/data-uuid-dc30073384e342ccb95edc7384f131c7 9/13 1/16/25, 3:41 PM Whitney Wolfe Herd’s Dating Strategy: From Tinder to Bumble Enter Bumble, the Feminist Dating App “Our mission is to create a world where all relationships are healthy and equitable."2 Although Wolfe Herd helped Tinder achieve massive success, she left the company under difficult circumstances in September 2014. She faced tremendous online abuse following her departure. Instead of feeling defeated, she rechanneled her torment to fuel her desire to create a dating space focused on empowering women, founding Bumble in December 2014. Wolfe Herd describes Bumble as the first feminist dating app.3 Her deep understanding of the online dating scene allowed her to innovate the Tinder business model by embedding a women-centric focus into the Bumble app. Bumble features a more controlled marketplace that establishes a safe space for individuals to find more meaningful, longer-lasting relationships. On Bumble, women “make the first move” after an (opposite-sex) “match” occurs. After a match, the woman must make the first move to initiate a conversation within 24 hours. If she does not, the match disappears.4 Other safeguards include an AI-based “private detector” feature, which blurs out any explicit pictures sent in chats. Wolfe Herd quickly grew Bumble’s user base by leveraging a marketing playbook similar to the one she’d used when launching Tinder. Bumble rapidly gained traction with many users of online dating services, especially women who had bad experiences on other dating platforms. Within the first month of its release, Bumble had over 100,000 downloads. Within three years of the app’s launch, Bumble had garnered over 22 million users, achieving more than 70% year-over- year growth. Bumble’s astonishing growth was seven times faster than Tinder’s. In 2021, Wolfe Herd took Bumble public with a $7 billion valuation. By 2022, Bumble’s community had grown to more than 125 million people globally, and the platform expanded to include more differentiated features: (1) Bumble Date for those seeking romantic relationships, (2) Bumble BFF for forming new friendships, and (3) Bumble Bizz for professional networking. In the dating app industry, Bumble has the second largest market share behind Tinder https://prod.reader-ui.prod.mheducation.com/epub/sn_2cf24/data-uuid-dc30073384e342ccb95edc7384f131c7 10/13 1/16/25, 3:41 PM Whitney Wolfe Herd’s Dating Strategy: From Tinder to Bumble (see Exhibit MC1.2), but it has the highest percentage of paying customers ( Exhibit MC1.4). EXHIBIT MC1.4 Dating Apps by Share of Paying Customers in U.S. (2022) Source: Author’s depiction of publicly available data. Most dating apps follow a freemium (free + premium) business model in which the basic service is free, and Bumble is no exception. Bumble charges users for premium services such as Beeline (showing users who have liked their profile and thus facilitating matches), Rematch (keeping expired matches in a user’s queue for an additional 24 hours), Busy Bee (allowing unlimited 24-hour extensions for matches), and SuperSwipes (in which a user can like another user, who is then notified of the like, again facilitating matches). While launching Bumble, Whitney Wolfe also had time for romance. She married Michael Herd (in 2017), and they are now the proud parents of two children. Guess how they met? Not online, but in real life during a ski vacation. https://prod.reader-ui.prod.mheducation.com/epub/sn_2cf24/data-uuid-dc30073384e342ccb95edc7384f131c7 11/13 1/16/25, 3:41 PM Whitney Wolfe Herd’s Dating Strategy: From Tinder to Bumble Page 506 DISCUSSION QUESTIONS Strategy is a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors. In any competitive situation, a good strategy enables a firm to achieve superior performance and sustainable competitive advantage relative to its competitors. As discussed in Chapter 1, a good strategy consists of three components: Step 1: A diagnosis of the competitive challenge Step 2: A guiding policy to address the competitive challenge Step 3: A set of coherent actions to implement the firm’s guiding policy 1. Apply the three-step strategy process to explain how Tinder achieved a competitive advantage. 2. Given the crowded marketspace in online dating, apply the three-step strategy process to explain Bumble’s success. 3. What do you conclude about the sustainability of competitive advantage in the online dating industry? Use Exhibit MC1.3 in making your arguments. 4. Why is Whitney Wolfe Herd so successful? Identify some of the characteristics that made her the youngest female self-made billionaire. Which traits would you want to emulate to help you succeed in your professional endeavors? https://prod.reader-ui.prod.mheducation.com/epub/sn_2cf24/data-uuid-dc30073384e342ccb95edc7384f131c7 12/13 1/16/25, 3:41 PM Whitney Wolfe Herd’s Dating Strategy: From Tinder to Bumble Endnotes 1. NPR (2017, Oct. 16), “Bumble: Whitney Wolfe,” How I Built This podcast, https://www.npr.org/2017/11/29/557437086/bumble-whitney-wolfe 2. Bumble Company Profile, https://www.shecancode.io/bumble-company-profile- page 3. Yashari, L. (2015, Aug. 7), “Meet the Tinder co-founder trying to change online dating forever. On Bumble, women always go first,” Vanity Fair. 4. In same-sex matches, either person can reach out. Sources: Bumble Inc. (2021), Annual report; Bumble blog: The beehive, https://thebeehive.bumble.com/bumble blog; Au-Yeung, A. (2021, Feb. 11), Bumble cofounder becomes world’s youngest self-made woman billionaire, thanks to IPO, Forbes; Subin, S. (2021, Feb. 11), “Bumble IPO: The female founder behind the dating app making market history,” CNBC; O’Connor, C. (2017, Nov. 14), “Billion-dollar Bumble: How Whitney Wolfe Herd built America’s fastest-growing dating app,” Forbes; NPR (2017, Oct. 16), “Bumble: Whitney Wolfe,” How I Built This podcast, https://www.npr.org/2017/11/29/557437086/bumble-whitney-wolfe; HBS Digital Innovation and Transformation (2017, Feb. 26), “Tinder’s growth strategy: Swiping to success,” https://digital.hbs.edu/platform- digit/submission/tinders-growth-strategy-swiping-to-success/; Santoro, E. (2013, Nov. 1) “Your app to find that ‘perfect’ someone,” CNBC; Lynley, M. (2013, Feb. 6), “Why you are seeing this dating app popping up everywhere,” The Wall Street Journal; Yashari, L. (2015, Aug. 7), “Meet the Tinder co-founder trying to change online dating forever. On Bumble, women always go first,” Vanity Fair. https://prod.reader-ui.prod.mheducation.com/epub/sn_2cf24/data-uuid-dc30073384e342ccb95edc7384f131c7 13/13