At the DLD conference in Munich in 2010, a young German internet entrepreneur found himself sitting next to a Russian guest. As drinks were poured and business discussed, the quiet but self-assured Russian bet his dining companion a one percent stake of his company if he could simply name it – his one clue: it was the fourth-biggest social network in the world.
So confident was Andrey Andreev, the then 35-year-old founder of “social meeting service” Badoo that no one at the table would be aware of his company despite its 150 million global registered users and claimed 150,000 new sign-ups per day, that he was willing to put a not inconsiderable chunk of its value on the line – estimated to now be in the billions.
June 5th: The AI Audit in NYC
Join us next week in NYC to engage with top executive leaders, delving into strategies for auditing AI models to ensure fairness, optimal performance, and ethical compliance across diverse organizations. Secure your attendance for this exclusive invite-only event.
The media-shy mogul is probably one of the most successful entrepreneurs you’ve never heard of, and Badoo is the “sleeper hit” of the social networks. But if you’re French, Spanish, Italian or Latin American (especially if you’re single and aged between 24-28), the chances are that Badoo is as much part of your daily digital life as Facebook or email.
“It’s not a Grindr for straights…”
Badoo’s concept is simple. Upload a few cursory details and a choice image, ping on location-awareness and you’ll see who is in your immediate radius and who might be appealing enough to arrange to meet in real life.
“Think of it like it’s a nightclub! It’s not just about sex,” says Andreev, slightly ruffled at my suggestion that it sounded like a Grindr for straight hookups. “Some people use the service in this way, but … If you own a nightclub – you have a space, you have music, drinks, lights – you bring people together and then it’s up to them to figure out what they want to do.”
This might also be the reason why the media has chosen, on the whole, to eschew Badoo. The Daily Mail in the UK described it as “the social network for sex” but Andreev is keen to position his product precisely: “Well, we’re not a dating site. A dating site is a place where you are looking to find someone to live with forever, you know, 14 pages of profile questionnaire.”
He whips out his iPhone – “So what we have here, is just random people who are around. We’re a meeting network. People come here for a quick chat, a quick meet, a quick… whatever.”
Voracious virality
Startlingly, Badoo has achieved its 150 million subscription level by virality alone. There has been next to zero marketing spend (discounting the three-day “Badoo Project” initiated in March this year to try to crack the US market). Launched in Spain in 2006, Badoo now has 6.4 million users there, plus around the same amount in Italy, 8.2 million in France, nine million in Mexico and 14.1 in Brazil – a staggering organic growth.
The service also carries no advertising or games, relying on a golden monetization model of letting users boost their visibility by paying for special “Superpowers” – like a Google AdWords for meeting people. Lloyd Price, Director of Marketing for Badoo, stated last year: “We expect to continue to generate in gross consumer spend per year.”
Various claims have been made that the company has bolstered its user numbers by collecting email addresses from those careless with privacy settings, a difficult unsubscription process, and issues with fake profiles. Facebook also threatened “an audit and potential removal” of Badoo’s app (currently clocking 8.5million users) on the platform if it didn’t make its app “less viral.” Does it need to tone down the user acquisition? The response from Andreev is short and signals an end to this thread of discussion: “Rumors are rumors.”
First we take Manhattan (and San Francisco), then Germany
Badoo’s executive base is currently in an 800 sqm loft in London’s Soho, with staff in Moscow and throughout Europe. “I chose London, as I don’t speak any other language apart from English. With our user base in Europe, this wasn’t a business we could operate in San Fransisco. It’s just not possible.”
But Andreev is in Berlin when I meet him — his first ever visit to the city. “I’m just here to ride bikes,” he says. “But I’ve been told by friends in the industry that Berlin is the best place in the world, the best for startups, for talented people, and technologists. They’ve been trying to convince me to open an office here. So I’m working out how to engage a user base here.”
Why does he think Badoo hasn’t taken off in Germany? “Well, I don’t have the formula – if I had the formula, I’d be big in China, in the United States, in Germany.”
As well as targeting remaining European territories, Andreev is aggressively going after the US, where there are currently eight million registered users, with various online acquisitions, and a content deal with attractiveness voting site Hot or Not. The company launched in New York in March of this year.
Andreev also hired Ben Ling [himself a keen angel investor in companies such as Fab.com and Square] as COO in April this year, as well as “many other Google staff.”
“He’s a very big Silicon Valley rockstar – he was with Google from the very beginning, before he moved to Facebook. Once you have the celebrities like that joining your company, you have other people watching you to see what you are doing,” he said of Ling.
Andreev claims that his company is working on “a very long roadmap” of upgrades and tweaks. “If I have the group of smart people at Badoo around me, we could make a To-Do list for all our offices for the next five years. But certainly in two years from now, mobile will be the only market.”
But the main focus is getting to that magical tipping point in new territories, especially before any US heavyweights attempt to replicate Badoo’s success: “Yes, of course. I just have to run faster.”
But these high-profile appointments, plus an admission that “we’re looking to open offices in San Francisco this year” would seem to hint at an imminent IPO. The company is rumored to be worth an estimated $2 billion. Is it time to sell? “Ummm … never say never” says Andreev tactfully.
And what of Berlin – in his eight hours so far in the city, can he see opportunity here? “I love the town, all of it. Maybe I will be convinced to open offices here.”
And would he bet his one percent stake in the company these days? “Perhaps not,” he laughs. “I think we’re getting too well-known to do that now.”
A version of story originally appeared on VentureVillage, VentureBeat’s Europe-based syndication partner.
This story originally appeared on VentureVillage. Copyright 2012
