The startup's revenue in six months has grown 50 times - from $ 450 thousand to $ 25 million. This hyper-growth worries skeptics: they believe that investors believe too much in the young project.
The Information edition spoke about the startup Hopin, which helps other companies to conduct video events. According to investors, it can become the fastest startup in terms of the speed of profitability.
They also hope that Hopin founder Johnny Bufarkhat will support growth after the end of the pandemic and the service will increase the market for online events several times.
Bufarkhat confirms the forecasts and expects that by the end of 2021, Hopin's revenue will quadruple to $ 100 million.
Where did Hopin come from:
Hopin creator Johnny Bufarkhat, 24, is an Australian developer with autoimmune disease. He's rented an apartment with Airbnb and lives in Barcelona. Prior to launching Hopin, Bufarkhat developed a student discount app and launched a couple of startups:
- Readery is an analogue of the Medium blog platform.
- A site that tells about foods that can be eaten in various diets.
Due to illness, it was difficult for him to leave the house and even get up from the sofa. During the diagnosis, Bufarkhat studied the causes of the disease and in 2018 attended an online seminar on microorganisms.
The seminar inspired him to create Hopin - for conferences with spectator presence and direct communication between participants. For example, Hopin offers quick sessions - participants are randomly paired for a few minutes to meet. They are somewhat similar to Chatroulette ten years ago, notes The Information.
In mid-2019, an entrepreneur defeated the disease by following a strict diet and founded the company - months after testing the first version of Hopin at an event with 140 attendees.
Hopin was less than two months old when a pandemic began in China, and organizers began to cancel major technology and business conferences for 2020.
Initially, Bufarkhat planned to maintain exclusivity to Hopin and grow its audience gradually, mimicking the launch of high-profile startups like Notion, Superhuman and Clubhouse. But to meet the sudden demand, it pushed its public launch from November 2020 to February.
To scale up quickly, Bufarkhat has hired about 250 people since the start of the pandemic, of which 100 are software engineers. All work is remote, with Hopin staff scattered across 38 countries.
By this time, there were about 20 thousand people on the waiting list, who came by word of mouth from conference participants. In the early days, about 7% of users became event organizers, now their number has dropped to 3%.
The influx was unexpected: Bufarakhat didn't realize that event organizers at Hopin were giving the startup free advertising, helping to attract even more customers.
Investors assessed the potential for growth through word of mouth: “We analyzed the data and realized - shit, this product is really viral,” says Paul Murphy, partner at venture capital firm Northzone. In February, he invested $ 6.5 million in Hopin less than a day after meeting with Bufarkhat.
Accel topped the first round ahead of investor Harry Stebbings. He was turned down in February.
But in June in Round A, he invested $ 40 million in Hopin.
The partners from the IVP foundation who led Rounds A and B have yet to meet the founder of Hopin in person.
The rise in Hopin's valuation may be unprecedented, The Information said. Among the closest peers are Bird, a startup that was valued at $ 2 billion 14 months after its founding, and Slack, which reached the unicorn title 20 months after launch.
Since launch, Hopin has hosted over 45,000 events, including for Slack and Adobe.
On average, 200 people attend a Hopin event. But it happened that the number of participants exceeded 10 thousand, says Bufarkhat.
Why is hopin so highly rated:
A growing number of young cloud startups are valued at 100 times their annual revenues, or even more. Investors compare them to comparable public companies, Sifted writes.
On average, the revenue multiplier for SaaS (software as a service) is at a record level - a multiplier of about 10-20, but for Hopin the multiplier was 100 ($ 2 billion at $ 20 million in revenue). There are two reasons for this:
The score is comparable to its closest competitor, Zoom, which was rated 96 times its annual revenue.
Hopin's average monthly growth since May is 50%, it managed to reach $ 20 million in revenue in eight months, it took Zoom about three years.
“Hopin is at this stage the fastest growing company that we have seen,” notes Jules Maltz, General Partner of IVP. According to representatives of Salesforce Venture, the "gold standard" when investing in a service is to achieve annual revenue of $ 100 million in five years.
If Hopin maintains its growth rate for another four months, it will achieve $ 100 million in annual revenues for the year. Even if the monthly growth rate drops from 50% to 3%, it will still get to $ 100 million in five years.
There are additional factors that attract investors, Sifted notes:
1) The global event market is valued at $ 1.1 trillion - 40 times the global market for streaming music services. There will be “enough space” for several “unicorns”, Hopin needs to occupy 0.01% of the market.
2) Hopin is easy to profit from: it grows organically at the expense of customers and saves on marketing and sales, the main expenses of the SaaS business. He does not have a physical office and saves on overhead costs.
3) The service already has 3.5 million users and 50 thousand organizations, the growth potential is still high.
4) There is huge demand for each round of investment, as the valuation of a startup is determined by demand, its value increases. Most funds are afraid of missing out on growth potential and overpay. For some funds, startup investments are insignificant compared to their size and their risk is low.
Google-level ambition:
Bufarkhat in meetings with employees says that Hopin can turn into a company worth $ 100 billion, but for this you need to work extremely quickly - face-to-face meetings and offline events are not yet possible.
He sees his own ego as the only obstacle to success, as many founders are afraid of losing control as the company grows.
Part of the $ 170 million investment Bufarkhat will spend on buying startups and hiring employees. In the coming months, Hopin will announce the purchase of an unnamed live broadcasting company.
A potential market for Hopin could include small formats such as conference calls or dinners for ten, where the interlocutors can talk to each other in private, as if in a “live” meeting.
According to Bufarkhat, Hopin can become a place for a wider audience for more intimate conversations and for creating socially significant online connections - as opposed to Twitter, TikTok and Facebook.
Also, the founder of the startup wants to turn the project into an everyday tool for white collars and become an alternative to Zoom, which will take into account the fatigue of people from endless video conferencing.
For this, events at Hopin can be “exciting and dynamic,” notes Bufarkhat.
For regular meetings within the company, he has hired event organizers who schedule the meeting as if it were a live performance. Meetings begin with live music from online DJs, and when there is an awkward pause in conversations, "elevator music" starts playing. It turns off when the conversation starts again.
Can investors be wrong:
Hopin's assessment is aggressive, but understandable if we consider that the indicators will remain, Sifted notes. But a startup is easy to copy, they are already doing it:
Bizzabo is an Israeli event platform that has held a $138 million E investment round.
Another project is run the World, a startup supported by the Andreessen Horowitz Foundation.
Since March, Microsoft Teams has a function of holding live events with the participation of up to 100 thousand people. In August, Zoom released a platform for online events and ticket sales.
And competition can slow growth and be costly — it will force more marketing spending and lower prices for customers. And users with a monthly subscription, rather than an annual subscription, can easily switch to competitors, as they will not lose money.
"Hyper-growth" can put too much pressure on the team and management of Hopin: in the coming months, developers will have to fight desperately fast for further growth and at the same time protect themselves from competition. Bufarchat will have to try to do this with a completely remote team distributed across 38 countries.
"Hopin has the market, the product, and the opportunity to become an extremely successful business," Sifted believes. But Zoom's quarterly reports raise questions about how much investor’s overestimate the impact of remote work: despite revenue growth, Zoom shares fell 10% after the financial report.