The Bumble IPO
Why it means everything and nothing about female founders.
Today, on February 11th 2021, Bumble began trading its shares as a public company, starting at $43 per share after raising about $2.12 billion from investors. For us in the tech world, Bumble represents an important anomaly. Whitney Wolfe Herd, Bumble’s 31-year-old CEO, is one of the youngest female founders to ever take a company public. Bumble’s corporate board is made up of 73% women, another rarity. But should Wolfe Herd and her company become the new poster child of female-founders? Absolutely not. The Bumble IPO means everything and nothing about female founders, and here’s why.
It means everything
Wolfe Herd is nothing short of a heroic genius. On How I Built this with Guy Raz, she shared her story of how she rose out the ashes from the most difficult experience of her life to build an incredible company. She had settled a sexual harassment lawsuit against her previous partner and coworker at Tinder and was subsequently abused by endless strangers online. “There were days where I didn’t want to live,” she said. And yet, in her darkest hour, she took a chance to start her own company, Bumble, that would be bigger and better. Building and scaling a company to reach an IPO is no easy feat. But it takes a special kind of female founder to achieve this in a market that competes directly with her previous abusers, all while being silenced under an NDA. This simply puts Wolfe Herd into a different stratosphere.
Bumble also demonstrates why having a female-led company can be a significant advantage when most of your target customers are women. Let’s face it: an engineering team of tech bros would never have built a dating app where the girl messages the guy first for heterosexual matches. Being female-led, Bumble has seen and taken advantage of opportunities to build an incredible product for female customers, where male-led teams could not. We already knew that building a product and marketing it to females (51% of the population) is not niche: it’s good business sense. Bumble’s IPO is further proof of this.
It means nothing
Bumble may be a female-founded and female-led company, but after all, it is just one company. Bumble’s performance and share price has no reflection on the ability of future female-led companies to succeed, and investors would be totally misled to draw any sweeping conclusions from the success of its IPO.
In recently decades, only a handful of companies that went public were led by women, who include Cathy Hughes, the first black woman to take a company public, and the founder of Stitch Fix, Katrina Lake. Still, according to Statista, 992 companies have gone public in the last 5 years. These days, the vast majority of IPOs are led by men, and yet many of their shares are trading at less than what they were offered at to the public market. For example, Lyft’s share price launched at $78.29 and is currently trading at $56.21. Snowflake’s share price launched at $328.79 and is currently trading at $305.91. And yet we don’t use these examples to question whether or not men are fit to lead companies as they go public. Maybe Bumble will trade above its initial public share price; maybe it will trade below it. The point is we can’t use the performance of one share price to generalize about the success of all current and future female founders and CEOs, and their companies.
It seems obvious to point out this bias, and yet investors continue to be swayed by it all the time. The worst example of this is Elizabeth Holmes, and her disgraced company, Theranos. Elizabeth Holmes was one female founder, who built one company that became defunct years ago. And yet, investors today continue to under invest in all healthcare tech companies led by women, because in their minds they equate female leading a healthcare tech company = Elizabeth Holmes. This generalization is not only completely wrong, but it’s delaying the advancement of human progress, because great new solutions in healthcare that happen to be built by women aren’t receiving investment. Investors are so distracted by a female founder, they don’t pay attention to the massive market that her startup is going after, or its unicorn potential. Elizabeth Holmes and Theranos is one data point, not a sample size, and the same goes for Whitney Wolfe Herd and Bumble.
In summary
Overall, the Bumble IPO is an inspiring story of how one female founder overcame an excessive amount of abuse and adversity to build an incredible business. It also shows how having a female-led company is a competitive advantage; when you can solve the needs of female users, you will be rewarded. But as we look towards Bumble’s future, let’s not generalize about what its performance means for other female founders and their companies. We need about 100 female-led companies to reach an IPO before we can get rid of this sampling bias, and accurately understand how these companies perform. Bumble is one of the first of many to come. It’s just the start.
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