How Whitney Wolfe Herd’s fateful deal with a Russian mogul deprived early Bumble employees of a stock windfall when she became a billionaire

February 11, 2021, was a momentous day for Whitney Wolfe Herd.

After years of grueling work trying to build a radically different kind of dating app, accompanied by constant scrutiny of her personal and business life, Wolfe Herd was enjoying a rare moment of vindication. 

Bumble, her app where women make the first move, had just listed its shares on the Nasdaq, and the stock was up more than 60%. At 31, Wolfe Herd was the youngest woman to take a company public — and was instantly minted the world’s youngest self-made female billionaire.

“I don’t need to justify myself anymore. I’m fucking done,” she told a reporter at Time, who described Wolfe Herd as “blinking back tears” during the interview.

Around the same time, another person involved with the app’s creation was also wrestling with her emotions. 

“I wanted to throw my phone into the water because I had so many people texting me ‘Congratulations, this must be so exciting for you, you’re about to get a life-changing amount of money,'” said the former employee, who spent three years at Bumble, from its beginnings housed in a cramped, two-bedroom apartment in Austin, where some staff meetings were held in the closet. 

“It was just the most triggering week in the world,” she said. 

The former employee’s friends assumed the startup gig had come with a hefty portion of stock options or restricted stock units, standard forms of compensation in the tech world. It turns out that Bumble had not followed the usual script. The ex-employee, along with dozens of other early Bumble staffers, had helped create a wildly popular dating app that would go on to be used in 150 countries, but they had no equity in the company.

For a lot of them, it was their first job out of college. They didn’t realize they should be entitled to equity as employees at a startup

Seven years after it was founded, and one year after its Wall Street debut, Bumble remains a tech company that epitomizes the possibilities of doing things differently: The dating app strives to be an antidote to the pervasive misogyny on social media, and Wolfe Herd’s approach to everything from content moderation to screen-time management within the app reflect a willingness to disregard unhealthy industry norms.

For early Bumble employees, though, the company’s unorthodox approach to equity, including selective use of an obscure form of compensation referred to internally as “shadow equity,” remains a perplexing and bitter memory that is difficult to reconcile with Bumble’s positive accomplishments and oft-repeated maxim — “Bee Kind.”

Wolfe Herd redefined the image of a tech CEO, yet many former employees said she insisted for years that she couldn’t deliver one of the most basic elements, and key benefits, of startup life. 

In fact, Bumble wasn’t really a startup. The buzzy app that championed female empowerment was a subsidiary of an overseas corporation controlled by a Russian billionaire, and Wolfe Herd was a founder with no voting rights in the parent company. The unusual arrangement did not stop Bumble from thriving under Wolfe Herd’s direction, but for many of the employees who devoted themselves to her vision, the distinction would prove crucial.

“I can’t count the number of conversations I’ve had where I mentioned I was an early hire at Bumble and people are like, ‘Oh, wow, congratulations, you must be rich,’ and it’s just sort of like, ‘Um, I got nothing,”‘ said a former employee.

The former employee, along with the 13 other current and former employees Insider spoke to for this story, were granted anonymity to discuss sensitive internal matters. Their identities are known to Insider.

Bumble declined to make Wolfe Herd or other executives available, but Robbie McKay, the company’s chief spokesperson, told Insider in a statement that “since the operating control of the company changed upon the acquisition of former shareholder’s equity in 2019, Whitney Wolfe Herd and the current board of directors have ensured that every single employee (over 800 people) have been granted equity and have an active ownership stake in Bumble’s success.”

(McKay also requested the reporter disclose a conflict of interest because he once tweeted a favorable comment about a competing dating app.)

Wolfe Herd tells hungover employees her ‘hands are tied’

Many of the Bumble employees in the windowless Ritz-Carlton conference room were hungover from a night of drinking and roasting s’mores by the fire as they tried to make sense of what Wolfe Herd was telling them.

The employees were in Half Moon Bay, a picturesque Northern California beach town, for Bumble’s 2018 “Beetreat” — an annual extravaganza of drinking, eating, and team-building whose past venues included Deer Valley, Utah, and Punta Mita, Mexico. That morning, Wolfe Herd was finally addressing questions about equity.

“My hands are tied,” Wolfe Herd told the audience, according to several people who were in the room.

Early employees told Insider they had been given vague assurances for years that they would be granted Bumble stock so they could get a chance to share in the company’s riches. Now, Wolfe Herd was telling them it wasn’t happening, at least not anytime soon. She could not give them any equity, she explained, because she did not control the company’s shares and would lose her board seat if she relinquished any stock.

“Everybody was sitting there fuming,” remembered one person in the room. “I could see steam coming out from people’s heads. It definitely solidified that she was not going to budge.” 

The personalized yellow key chains that Bumble had distributed to its first 100 employees at the retreat, a token of gratitude for loyal service, now felt like an ironic slap in the face, one person recalled. Some recipients of the key chains, furious about the stock update, left the gift behind in their hotel rooms. 

Bumble’s spokesperson said: “It was made clear to them that while no equity was available now, if they stayed with the business there could potentially be opportunities in the future.”  

Sarah Mick, Bumble’s first chief creative officer, said it’s unfair to suggest Wolfe Herd acted maliciously in regards to employee stock compensation during the company’s early days.

“That’s not her character. The goal of this was to do something good,” said Mick, who teamed up with Wolfe Herd to launch Bumble and received a 0.5% stake, one of only two early employees to receive a standard form of equity.

“I can unequivocally say that if there was anything that ended up not correctly being handled, she definitely never went into it with that intention,” Mick told Insider. 

An unusual pairing leads to a ‘Faustian bargain’

Wolfe Herd’s decision to create Bumble was a result of her miserable time helping start one of its biggest competitors and, ironically, feeling short shrifted on equity by that company, according to Mick, who sat next to Wolfe Herd when she was a designer at Tinder.

“After our experiences creating Tinder, she wanted to create something that was positive for women,” Mick said. “She had found a cause she believed in.” 

Wolfe Herd famously quit her marketing role at Tinder in 2014 and filed a sexual-harassment lawsuit that claimed her boss and on-and-off boyfriend, Justin Mateen, had lashed out at her after they ended their relationship. Wolfe Herd and Tinder quickly settled for a reported $1 million plus Tinder stock.

Wolfe Herd never wanted to create another dating app after she left Tinder, she told Insider in a 2015 interview, but rather a female-only social network grounded in support and empowerment. But then she met Andrey Andreev, a Russian entrepreneur who had already launched several successful dating apps, including Badoo, which mostly flies under the radar in the US but is one of the most-used dating apps in the world. 

It was an odd pairing, both culturally and geographically. Most of the engineering and product design was handled by Andreev’s team in London, while Wolfe Herd, thousands of miles away in Austin, oversaw marketing and a work culture many employees described as cliquey.

The partnership also came with onerous terms: Andreev would own close to 80% of Bumble, with Wolfe Herd getting around a 20% stake. What’s more, Bumble would be a subsidiary of Worldwide Vision Limited, Andreev’s Bermuda-based parent company. Wolfe Herd had no equity, ownership interests, or voting rights in WVL.

“It was a Faustian bargain,” said a former employee. “She didn’t own her own company. To get it off the ground, she had to hand control over to the Russian guy.” 

On the surface, Wolfe Herd played the part of the typical startup CEO, frequenting the tech-conference circuit, with appearances at TechCrunch Disrupt and South by Southwest. And while Bumble seemed like a well-funded startup, with generous perks and free food served in a colorful open-air office, there were some telltale signs of Bumble’s unusual corporate structure, including the fact that it had no engineers in Austin.

Founders often make fateful decisions in the very early days that they later come to regret once the company gets off the ground, said Mick, who has worked at several startups. No one, including the 25-year-old Wolfe Herd, could have known the smash hit that Bumble would become, she said.

“I think that at the time that she started it, she likely thought it was a great deal, given her experience at the time,” said Mick, referring to Wolfe Herd’s arrangement with Andreev.

The power dynamic behind closed doors between Wolfe Herd and Andreev remains unclear. In public at least, they projected closeness and were effusive with praise. Wolfe Herd once called him her biggest mentor, saying, “He’s become my family and one of my best friends.” Andreev referred to Wolfe Herd in 2019 as his “best partner and a dear friend.” 

Bumble’s spokesperson told Insider that Wolfe Herd advocated for equity grants when she founded the company in 2014 but could not grant them because she did not control the company. 

Andreev did not respond to multiple messages sent by Insider.

Former employees say it stretches their credulity to believe the powerful Wolfe Herd — who could seemingly turn anything she wished at the company into reality — was powerless to grant equity. They also grew tired of her blaming Andreev and his majority stake in the company for their predicament. 

“She used to give a lot of different excuses about why she couldn’t do it, but ultimately she could do anything she wanted,” said one former employee. “It was a self-constructed limitation.”

Instead of traditional stock grants, the board did agree in 2014 to award a select few employees what was referred to internally as “shadow equity.” Sometimes called phantom equity, it is a way for companies to award cash based on how a company’s stock performs. But crucially, the recipients do not receive any actual stock, so the advantage for Wolfe Herd and Andreev was clear: They could retain employees without diluting their stakes. 

It is unusual for startups to issue shadow equity, according to Jody Thelander, a compensation executive who regularly surveys tech companies.

“You hear these cases, but I think they’re few and far between,” she said. 

Bumble’s spokesperson would not say how many employees were issued shadow equity but confirmed that Wolfe Herd’s close circle of early executives and friends known as the OGs all got it — former head of brand Alexandra Williamson, former chief operating officer Samantha Fulgham, former director of marketing Chelsea Maclin, and chief of staff Caroline Ellis Roche.

Some early employees said they only found out about the shadow-equity program, and who received it, years later. Had they known about the behind-closed-doors deal earlier, a former employee said, “a coup would have occurred.” 

Bumble employees acknowledge they were hardly suffering. They enjoyed complimentary blowouts and manicures every month in the Austin office’s mirror-lined “glam room.” London workers were treated to breakfast at a morning omelet station, daily five-minute massages, and free haircuts every other Thursday. But they say the constant reminders of free-flowing capital and standard startup perks made it all the more infuriating they were not getting the one startup perk they really wanted. 

“It was this dichotomy of we’re doing very well as a company and the whole company is staying at a Ritz-Carlton resort outside San Francisco on the beach and everyone’s ordering whatever they want to,” a former employee recalled. “But no one has any stake in this company.”

Some employees said they were led to believe they would get equity

After Wolfe Herd married Texas oil magnate Michael Herd in a lavish ceremony in Positano, Italy, in 2017, the wealth and glamour of Bumble’s CEO became more pronounced in the eyes of employees, as did the anxiety of those who felt they’d been deprived of equity.

Early employees — some of whom felt underpaid and underappreciated working long nights and weekends — kept asking when they would get stock.

“There was lots of whispering because people didn’t feel comfortable straight-up asking in an all-hands meeting,” said a former employee. “There had been lots of people talking to HR, people asking their managers, but their managers didn’t have equity and they didn’t know what the situation was.”

Some employees submitted anonymous questions for all-staff meetings via online forms — often in coordinated efforts to demonstrate widespread interest — but say Wolfe Herd never answered them until the 2018 retreat in Half Moon Bay. (“This is false,” said Bumble’s spokesperson. “The team would answer any HR-related questions to the best of their ability.”)

What particularly galled some employees, according to three early hires, was they had all been led to believe they would be granted stock. The former employees recall being told the company was “figuring it out” and planned to “take care of everybody.” 

“I was like, ‘OK, I trust these people,'” one early employee remembered. “This is a reputable company. This isn’t some random startup. People knew what Bumble was and they’re not going to pull the wool over my eyes.”

Another asked why stock wasn’t mentioned in her offer letter after her hiring manager promised it during the interviewing process and was given the “we’re working to take care of you” line. 

“It was said to lure me in and it was never mentioned again,” the former employee said, adding that she wishes she had insisted on getting something in writing. “In retrospect, I should have pushed for that.”

Another former employee remembered Wolfe Herd saying on multiple occasions that she planned to “make it right.” 

“I guess it is up to interpretation for what that means,” said the former employee. “I interpreted it as there would be some kind of equity of a sufficient amount before an IPO or sale.”

Bumble’s spokesperson said that “all commitments were honored” as it relates to equity.

Other early employees acknowledged they were never promised stock and were obviously free to seek other jobs with equity compensation. But they still felt they should have been rewarded for helping create something so lucrative.

“I just feel like if I was suddenly worth a billion dollars and I knew there were these people who helped me get there that, intentionally or not, didn’t get their share, I don’t know how I could live with myself,” said a former employee.

Asked why they accepted a job without equity, former employees cited a variety of factors — quickly needing a new job after a breakup or being laid off from a failed startup, or needing a UK visa that Bumble would sponsor.

“We all came to Bumble for different reasons and, in a way, we were distressed assets,” said a former employee, who said he doubts employees would have joined the company if it was based in the Bay Area, where stock options are talked about obsessively.

It also did not help that many early employees were inexperienced. 

“For a lot of them, it was their first job out of college,” added the former employee. “They didn’t realize they should be entitled to equity as employees at a startup and it was really abnormal they didn’t have it.” 

Last year, employees at Mailchimp were furious when they learned the Atlanta-based email-marketing company was being sold to Intuit for $12 billion. The company’s two cofounders made about $5 billion each from the deal, but employees had never been given equity and got nothing.

Examples like that are rare for US startups, which typically offer stock in exchange for backbreaking hours and precarious job security.

“That’s why someone will leave a steady job and go to a startup, as they get equity, which promises great returns,” said Charles Elson, a professor of finance at the University of Delaware who is a leading authority on corporate governance.

Elson told Insider that while he did not know the specifics of Bumble’s bylaws, Wolfe Herd’s explanation that she would lose her board seat if she gave up shares is “unusual.” 

“As a CEO and founder, I find it hard to imagine they would remove her from the board unless they were going to remove her from the CEO position,” Elson said, adding that minority shareholders owning 20% or even less of a company frequently advocate for significant changes. 

“It happens all the time,” Elson said. “With that kind of block, you can accomplish a lot.”

Nine months before the IPO, employees get equity

In 2019, Andreev sold his entire stake in MagicLab, the renamed parent company of Bumble and Badoo, to Blackstone at a $3 billion valuation, after a salacious story in Forbes earlier that year detailed naked, cocaine-fueled parties and the objectification of women at Badoo offices in London.

Wolfe Herd was named CEO of MagicLab and received a cash payout of $125 million, and an entity she controlled received a $119 million loan, which she later repaid. The next year, there was another corporate restructuring, with a new president, board of directors, and Wolfe Herd becoming CEO of Bumble, which would become the parent company of Badoo. 

After more than five years of not controlling a company for which she served as the public face, Wolfe Herd was finally able to award stock options and restricted stock units to all her employees starting in June 2020 — just nine months before the IPO.

As Bumble navigated the challenges of the pandemic as a public company, it has continued to grow its revenue. But investor worries about user growth have weighed on its stock, which has fallen from its initial surge a year ago and now trades well below its IPO price. 

Based on the current share price, Wolfe Herd is no longer a billionaire, though her fortune still sits at an estimated $627 million. 

For the employees who helped create Bumble and left in frustration before equity became available, it is still hard to accept being left off the cap table, especially as they have seen some of their peers at competing dating apps enjoy early retirement.

“On the one hand, you’re proud of what you’ve done,” said a former employee. “The company exists because of all the hard work you’ve done. But as far as the company history and our own bank accounts go, we might as well have never been there.”

Do you work at Bumble or another tech company and have a story to tell? Contact reporter Ben Bergman at [email protected] to set up a secure and confidential Signal conversation. Open DMs on Twitter @thebenbergman.