Home Business News Badoo: Can the world's fourth-largest social network break Britain?

Badoo: Can the world's fourth-largest social network break Britain?

30th Apr 12 2:34 pm

It’s already got a reputation as the “social network for sex”. CMO Jessica Powell reveals the truth behind the rumours

Follow me on Twitter: @sophiehobson and @LondonLovesBiz

You probably haven’t heard of Badoo yet, and if you have it’s either because you’re a heavyweight investor, a tech scenester, or because you read in the Daily Mail a few months ago that one in three of its members use the service for sex (which we’ll come to later).

But you should know about Badoo. Not least because it’s the world’s fourth-largest social network, boasting more than 147 million users spread across 180 countries. It is growing by 125,000 new users a day. In both Spain and Brazil, roughly one in eight people who use the internet are Badoo members.

Besides that, five-year-old Badoo is also that rare fish in the bubble-filled sea of tech companies – it actually makes money. In fact, it’s been profitable for two years, with an annual run rate of $150m. Valuations vary according to which blog you’re reading, but tech bible Wired last year described it as a “billion-pound” social network. And, impressively, Badoo hasn’t taken any investment since 2008, by which time Russian TMT-specialist Finam Capital had injected $30m in the then two-year-old company.

So let’s start at the beginning. Badoo is a website and mobile app for meeting new people. You might want to meet them for conversation, friendship, a night out, or for, well, something a little less strings-attached. It’s up to you.

In both Spain and Brazil, roughly one in eight people who use the internet are Badoo members

You can use all Badoo’s main services for free, meaning you can create a profile, upload some posy photos of yourself, see all the other Badoo users in your area (and their distance from you in metres if you’re using the mobile app), and exchange messages with whoever you like.

Badoo makes money be employing the freemium business model – the main product is free, but you pay if you want extra services. So you pay a small charge to feature at the top of the listings of all those people nearby, or to make your message the most prominent in someone’s inbox. As well as these micro-payments, there is a paid-for subscription service: the premium version of Badoo, which gives you ‘Super Powers’. The Apple app is £1.99 a week. Overall only around five per cent of users ever pay anything – though in some countries that will go up to 40 per cent.

By the way, if you’re wondering how you missed the hundreds of millions of people having all this fun, fear not, they’re mostly based in Latin America and Southern Europe. Badoo started in Spain in 2006, and spread virally from there.

Badoo’s pushes into the US and UK

Despite being headquartered in Soho, Badoo is yet to explode in the UK. As well as the British market, it also desperately wants to break the US. (ComScore research from 2009 found that the UK is the most valuable market per internet user in the world, with the US in fourth place.)

Heading up the pushes to break these markets (among other tasks) is Jessica Powell, who was appointed chief marketing officer last year. It’s Powell I’ve come to meet today, rather than media-shy founder Andrey Andreev, the Russian internet entrepreneur who previously founded Russia’s Mamba and Begun.

Jessica Powell, CMO of Badoo

I’m happy talking to Powell – after all, she carries a not inconsiderable amount of tech prestige herself. Fluent in English, SpanishFrench, Portugueseand Japanese, and with a BA from Stanford University, Powell hopped around various major posts within Google, landing as senior director of communications and public affairs for Google Asia Pacific before leaving to join Badoo.

She says she was lured by Badoo because: “it was the opportunity to work in a smaller company, growing very, very fast, but they didn’t have everything figured out. So how are we going to tackle these other markets, how are we going to go beyond Europe, what’s the right way to build structure to do that?”

She was also “intrigued” by the freemium model, and “by the fact [the Badoo team] built this already successful business without having run ads, which is not such a common route in tech.”

She is clearly very bright in conversation, and smiley, her bouncy American accent flecked with the occasional “y’know” as she sits wrapped up in a long grey cardigan and jeans, which combined with slightly hippyish long blonde hair provides an aesthetic antidote to corporatism. The Badoo office in Soho is similarly un-blue-chip-like, with benches and beanbags and the most well-stocked company kitchen I’ve ever seen for its 250 London employees. (There are another 50 staff in Moscow and a lone one in California.)

Powell has built a new marketing team here in London in the nine months since her arrival, ready to figure out how to get Badoo into the US and UK while continuing its success in other markets.

The problem is that while Badoo is huge in Latin America and Southern Europe, us Brits and our neighbours over the pond haven’t latched onto it in quite the same way. Powell thinks the difference in take-up is at least in part down to cultural attitudes. Southern European countries and Latin Americans tend to be happy socialising with strangers, which makes them more open to a service that is centred around meeting new people. Powell references Spain’s café culture, where you could quite often go out with a couple of friends, end up chatting to another group and spend the rest of the night with them, without being drunk.

The service operates in 40 languages, which covers off more than 90 per cent of the world’s population, so it has to date been a case of allowing users to discover it for themselves

Over in the UK, as Powell more tactfully puts it: “Our social rituals are a little more elaborate in terms of when is it okay to approach someone and how do you do that.” So it’s taken a few new tacks to get Badoo going. “When I [joined Badoo] we started looking at trying to build those kind of features for populations that don’t come together as easily. What features can we bring them together with and help them get over that?” The result was a feature called ‘Interests’, launched in November
last year, which allows you to display your interests and see others’. “That had huge adoption in the UK and US, and we designed it with those countries in mind.”

Over in the US, Powell is also battling the sheer size of the country. Any viral spread among a group of friends is diluted by the enormous distances between the different states they might live in. And, of course, for a service that is ultimately about meeting new people offline (Badoo claims half of online conversations end in a real-life meet-up), you need enough people in your area to be members to make Badoo worth using. (Powell won’t reveal what density of people constitute that critical mass – “We have some ideas on that, but I’m totally not going to say what they are!”)

So, stateside, Powell is trying out traditional marketing for the first time in Badoo’s history. The “NYC Project” recently saw thousands of New Yorkers get their hair and make up done then be shot by a fashion photographer in a bid to become one of the new billboard faces of Badoo.

Historically, Badoo’s adoption in new markets hasn’t been contrived. The service operates in 40 languages, which covers off more than 90 per cent of the world’s population, so it has, to date, been a case of allowing users to discover it for themselves. Powell’s arrival signifies an interesting milestone in the company’s development, as growth plans and marketing become more structured in a bid to win lucrative new markets.

Tech success: experimenting for growth in new markets

Powell tells me that the Badoo team implement new features as a response to the way a new market interacts with the service, rather than meticulously trying to predict the population’s wants. It is this kind of agility that helps many fast-growing tech companies accelerate their market share at rates that make more traditional industries gawp at; it’s a “build fast and see if it works” attitude, highly entrepreneurial and experimental.

Powell doesn’t even have a marketing budget. “We are very much experimenting with a whole bunch of different things across a whole bunch of different geographies. With the founder and other senior management we agree what we want to do, then we go off and do it,” she says. Could you imagine the CMO of Procter & Gamble not having a marketing budget? Or Mars deciding on a whim to roll out a guava-flavoured chocolate bar in the space of a few weeks, just to see if it worked?

To realise greater growth, though, Badoo might in the next few years have to start treating each market in a more structured, individual way. Powell’s experience at Google exposed her to the cultural differences that can inhibit a product’s acceleration in any given market. Working on YouTube in its early days, she explains, she had to resolve the fact that the proliferation of guns in videos deeply troubled a UK audience. Americans, meanwhile, wouldn’t blink at the sight of a firearm, “but the US would freak out about seeing a woman’s breast. And those are two countries that are, in the grand scheme of things, relatively similar.” This gives you just some idea of how complicated a truly international media product can get.

Badoo is trying to keep things simple for the time being. Powell says: “Right now there’s not a huge amount of customisation for different countries, and we’re still very focused on building a product that can work globally.” Fine-tuning the service in different countries seems to be part of a long-term strategy: “It’s one thing to translate [the service for any given country], it’s another thing to create a very local look and feel. We’re past that first point of just making ourselves available in all those languages, and I think we have a really good user experience in those countries, but there is certainly a lot more we can do to make things feel really local and good to people in those countries, and more customised and more culturally relevant.”

Breaking the Brits: fighting off prostitutes and that “sex network” reputation

To become huge in the UK, Badoo needs to establish and clarify its positioning here. It is a point Powell comes back to several times: “A lot of people assume the site is a dating site, and it does sometimes have a dating look and feel to it, but there’s so much more that happens there,” she says. “What can be confusing to some people on the outside looking at Badoo – and, I think, one of the reasons Badoo grows – is because it does offer that flexibility. One second you flirt with someone, another time you have a completely different interaction with someone.”

Badoo must also deal with the “social network for sex” reputation, fostered in large part by an in-depth profile in Wired which described it that way, and by a Daily Mail article which claimed one in three of its members use it to find people to have sex with. Powell is clearly a bit fed up with people citing the Mail article, saying the paper exaggerated Badoo’s own research that found 30 per of users go to Badoo “for some romantic purpose”. She’s careful not to dismiss that sex-seeking use of the site though: “Use the platform as a platform.”

It has a couple of smaller potential fights on its hands too. There are a few negative reviews floating around the internet. Trustpilot.com, for example, gives Badoo an average of 1.4 out of 10 from 292 reviews. The main accusations are that Badoo is spammy, that you have to pay to get noticed, that you occasionally get targeted by prostitutes, and that people use false information.

“The site wouldn’t work if it was all prostitutes”

Powell defends her company by pointing out “people on trust sites are going to write because they’ve had a bad experience in the same way”, and highlighting the very strong Apple app store rating (which gives both the free and subscription versions of Badoo 4.5 out of 5, based on 565 ratings and 53 ratings respectively).

As for the prostitutes: “It would be pretty difficult to be a prostitute on Badoo, because if people feel like they’re interacting with someone and having a good conversation, then someone says, ‘Hey, check out this web cam,’ and it takes you to some place where it asks you to pay, that angers people. It’s not what they signed up for. So we have all kinds of community reporting tools – you can report someone, and if an account is discovered to be for prostitution we terminate it right away.” And she makes the good point that “the site wouldn’t work if it was all prostitutes”.

As well as community reporting of fake profiles and other nasties, Badoo has a team of more than 300 people who moderate photos – “a photo doesn’t go up without it being seen by one of our monitors”.

There is one o
ther potential misuse that could potentially become particularly problematic in the UK – what happens if underage girls or boys start using Badoo and meeting up with much older adults offline? This makes Powell noticeably cagey. She says: “Obviously we don’t allow people who are younger on the site, that’s very, very clearly written into the T’s&C’s, and we check your age when you come on.” She talks again about the community reporting tools, and says that “most 13-year-old girls do not pass for 22”, and photos are moderated before being uploaded.

And, of course, “what you’ve just said could happen on pretty much any social network and it would not be very fair to depict that as happening on Badoo.” Which is a fair point, and it’s not an accusation that seems to have ever been levelled at Badoo before, but it is something the Badoo team might need to think through in our hyper-sensitive country.

But providing Badoo takes all those potential obstacles in its stride, which, let’s be honest, it has evidently done a pretty good job of doing elsewhere in the world, it seems very plausible that it can conquer the UK and US.

And the potential really is quite thrilling. As Powell says: “The bulk of revenue actually just comes from countries where we’ve been present for a long time. So when you think of it that way, you realise what the actual opportunity is in terms of monetisation.”

Badoo isn’t looking for more investment – “we’re in a really nice position in that we can fund any further expansion ourselves, so our focus is just on product and operations right now” – even though it doubtless gets plenty of approaches (“yeh, that happens”, Powell shrugs). Tech blogs have been eagerly whispering about an IPO for the last couple of years, but Powell says it’s not on the agenda right now.

So for now, we’ll just have to sit back and see whether Badoo can recreate the success it’s had in Europe and Latin America here and in the US. And if it achieves that, it might not be long before Badoo goes for the title of third or even second-largest social network in the world.

Follow me on Twitter: @sophiehobson and @LondonLovesBiz

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