Once CEO Clémentine Lalande: How I Sold Our Company
The keys included identifying primary objectives and sticking to your principles.
Dating app Once’s concept is simple. Its road to an exit was not.
Once uses AI to provide users one match per day, a mechanic designed to move away from the frenzied swiping of Tinder. In mid-January, Dating Group, one of the main dating app industry players, acquired Paris-based Once for $18 million in cash and stock.
Once CEO and co-founder Clémentine Lalande played a key role in navigating the company to that point, which included making some big calls such as layoffs when the company was bleeding cash and launching a well-time branding campaign just before the pandemic. When I spoke with Lalande, she was still catching her breath from an intense year that led up to the sale.
“It was a lonely, stressful experience,” she said. “But at the same time, I don't think I've ever learned so much in so few months.”
Lalande’s path to becoming Once CEO was unconventional. She had studied engineering in France and Germany and then worked at the Boston Consulting Group for 6 years as a strategy consultant for energy and industrial clients. From there, she joined the Yunus Social Business, the social impact investing fund, and moved to Haiti. For two years, she oversaw social investments in Uganda, Brazil, and Colombia. She returned to Paris in 2016 as a principal for Idinvest Partners.
Despite some rewarding work, she felt something was lacking.
“I got tired of not doing things myself,” she said. “I feel good in action, in movement, and investing was still far away from that.”
Around this time, she reconnected with a former Toulouse middle school classmate, Jean Meyer, who had launched a dating app company in 2015. Once had already raised $8.5 million in venture capital in two rounds led by Partech. Though Lalande originally joined as COO, she eventually also became involved in product development on the way to taking a co-CEO role.
“I think it was really helpful for him to have a women’s perspective, and especially in the dating app space,” she said. “This gender balance brings up richer discussions when you talk about product design intentions and also branding.”
The Dating Market
Lalande describes the dating app business as a giant supermarket with limitless choices. But users tend to connect passionately with one or two that really speak to their lives and needs. Once found its audience by pursuing a “slow” dating strategy.
This proved especially powerful to women who were turned off by the rapid and shallow encounters offered by other dating apps. By offering just one match per day Once aimed to let people have time for conversations and reflection before moving on to the next step.
“You still feel, especially as a woman, very much like a piece of meat on the butcher stand,” Lalande said. “You lose that feeling that you actually talk to real people. So Once has this mission to invent what comes next after swiping and bringing new solutions, and the big solution we bring is slowing the game down.”
To further that mission, Lalande and Meyer started a second app, Pickable, initially as a separate company. Pickable offered anonymous dating for women who weren’t required to upload any photos or personal information. Men, on the other hand, had to upload photos and information and wait for a woman to contact them.
In May 2019, Once formally acquired Pickable and folded the two apps into the Once Dating Group. Amid the growing popularity of both apps, however, another problem began to emerge: The company was spending too much money. Something needed to change.
So in August 2019, Meyer left the company and Lalande became the solo CEO and had to make a dramatic call. She let go 30 of the company’s 40 team members to put the company on a path to breaking even again.
“It's been painful and difficult and hard to let go a lot of people,” she said. “There are probably things that are maybe tougher to do for the founder and maybe easier for someone that's a different person. But it's what I had to do.”
“There's a lot of myths in terms of venture capital,” Lalande added. “You raise your round, you spend a lot of money, you have big teams, you go on the J curve, you have this phenomenal growth, and then you're going to raise the next round. But sometimes it's not the time to do that. Sometimes it's time to be healthy. And sometimes it's not the time to grow.”
The underlying unit economics of the apps were solid. But to balance the books, the company had to cut office expenses and product costs. The good news was that the apps continued to grow. By October, Once had returned to profitability.
In addition to addressing the fiscal situation, Lalande’s other major priority as CEO was branding.
“I wanted to continue building this super fresh brand,” she said. “Because you really need the brand to convince people because it's an acquisition game. So it requires creativity.”
In January 2020, with a lean marketing team and budget, Once launched a new campaign that took a lighthearted approach to its messaging, including poking fun at the overuse of emojis and the shallow experience of many dating apps.
As the company explained:
The famous “swipe” apps have created millions of stories that are too short, that could have been beautiful but which generally ended as quickly as they started… The crazy swipeurs, the ghosters, copy-pasters, dickpics ...
The January timing was strategic. Media buy rates are lower post-holidays. And after a year of yellow vest protests, Once was able to strike some bargains to advertise in the Paris Metro and on signage around the country. In general, January tends to be the big advertising month for dating apps.
“The first reason is people are depressed because they went to dinner over the holidays without a partner and Aunt Alice is like, ‘Oh, who are you going to bring me next year and when can I meet your girlfriend?’” Lalande said. “And then it's a new year and everyone talks about objectives for the year and resolutions and everything. So singles are depressed and January is the peak of signups.”
Above all, the goal of the campaign was to get people talking about Once. It worked. Larger dating app groups began knocking on the company’s door.
Let’s Make A Deal
Just a handful of conglomerates dominate the dating app space, each holding portfolios of dozens of apps. With some rare exceptions, the path to an exit runs through one of them.
By Spring 2020, Once had buzz and profitability, which made it super attractive. Two different groups approached Once between February and April 2020. There was no urgency to sell. But there were also lots of upsides for considering it, including being part of a large group with more resources.
Lalande already knew all the main players, having had various discussions with them over the years. Following the latest inquiries, Lalande decided she needed to establish some kind of formal process. So she reached out to an investment bank, though she didn’t have a huge budget for banking services.
That led to some official guidelines. The bank helped reach out to other potential acquirers to let them know that Once might be for sale. And then timelines were created for when proposals needed to be made, responses received, etc. By August, Once had agreed to move into an exclusive negotiating period with one bidder. This began a more intensive period of due diligence followed by several weeks of deal negotiations that would last until early December.
Meanwhile, Lalande was both torn and isolated on a personal level. There was virtually no one she could discuss the negotiations with due to the secrecy requirements of the process. And at the same time, she had to run the business, keep the team motivated, and keep growing the apps.
“It’s a really stressful situation to manage the negotiations and future interests of people who invested in you and the future of the company, and at the same time also still keeping an eye on your company and trying to focus on as if nothing was happening,” Lalande said. “It’s a lot of work, and of course I was not able to produce an additional two days a week.”
On January 19, Dating Group announced the $18 million deal. In terms of who made what from the deal, Lalande simply noted that at the time of the sale, Once had a “pretty fragmented cap table.” Meyer still had shares, as did some other employees, investors, and two other official co-founders: CPO Guilhem Duché, and CTO Guillaume Sempé.
But it’s clear that Once has a solid future.
“We strongly believe in the concept of AI and making quality matches. We see a huge potential in integrating Once into our portfolio”, said Bill Alena, Chief Investment Officer at Dating Group, in a statement. “We’re excited to have Clémentine join Dating Group, she and her team have built a fascinating product and with this acquisition, Dating Group expands deeper into the Western European market.”
There is, alas, no rest for the weary. Lalande has had to plunge directly into a myriad of new tasks related to integrating Once. That includes learning how Dating Group works but it also means having some potential resources to do some hiring.
Dating Group has offices in 7 countries, more than 500 employees, and 73 million registered users. So Once is small in terms of employees, but it brings more than 10 million users, which is not an inconsequential number.
“They wanted to keep the brand and keep us but also to continue growing the brand,” Lalande said. “They have big plans for that because it fits well in their portfolio.”
Lalande is busy developing the plans for marketing and reaching new audiences while trying to understand the possible synergies. So her time to reflect on the whole experience has been limited. Still, there were a couple of things she’s taken away from the past two years.
“I feel that my leading principles that I had when I took over the company were the ones who made the deal successful,” she said. “Build a strong brand. Focus on economics and profitability. So, I think that the message is that if you're really clear about those priorities because they make business sense for you and your company at that time, then this should be your only focus. And then, regardless of whether the deal happens or not, you'll still be right, because this is still something that makes sense business-wise.”
She added: “You need to align a lot of stars to make a deal like this happen. And so I also think I was a bit lucky. But simplifying your objectives so you don’t lose focus is something that helped me navigate through long and tough times.”
In other news…
Founders Future has launched a new fund focused on impact-driven startups. According to Sifted.eu:
The fund is the firm’s second and will focus on seed and Series A investments. It’s targeting a close of €50m and has raised €20m of that so far. Most of the money has come from angel investors, including Thierry Gillier, the founder of clothing brand Zadig and Voltaire; Bris and Yves Rocher, from the French cosmetics brand Rocher; and Michael Benabou.
The big picture: “Tech for Good” is one of the big themes in the French Tech ecosystem. Getting corporates and startups organized around that is a big opportunity. This new fund should help keep that momentum going. Still, making returns for investors in this space will ultimately determine how much difference such efforts can really make.
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