The Dubsmash Business Model – How Does Dubsmash Make Money?

Executive Summary:

Dubsmash is a mobile application that allows users to create short videos (so-called ‘Dubs’) using pre-recorded sounds. This may include famous movie extracts or popular songs.

Dubsmash makes no money as of today. The company currently focuses its efforts on growing its user base and improving the user experience. Potential, future monetization streams could include sponsored content, premium features, video ads, and more.  

Founded in 2014, Dubsmash quickly rose to worldwide prominence. The company has raised $20.2 million. Dubsmash has over 200 million users coming from 192 countries. Its users have created more than 1.7 billion videos to date.

What Is Dubsmash & How Does It Work?

Dubsmash is a social media app that lets its users create short-form videos based on audio clips from famous songs, movie scenes, quotes, and more. The pre-recorded sounds are known as dubs.

Like TikTok, the goal of Dubsmash is to create viral video content that will be shared across different platforms. To that extent, Dubsmash inserts its logo on the bottom corner of every video. Users can furthermore share their dubs with friends on other platforms such as Facebook or Instagram.

Dubsmash is available on mobile devices only and can be downloaded via Google’s Play Store or Apple’s App Store.

The layout of the app is very simple. Once logged in, users can browse a feed to see what their friends and other people they follow have posted. Alternatively, they can hit the Explore tab to find new content (based on hashtags or sounds).

Videos can be directly recorded within the Dubsmash app. To allow for further customization, Dubsmash has added some visual features such as color filters, a zoom function, or the ability to alter the length of the video.

Today, Dubsmash has amassed a user base of over 200 million people across 192 countries. More than 1.7 billion videos have been created so far, with 35 videos being added every second.

A Short History Of Dubsmash

Dubsmash was founded in 2014 by Jonas Drüppel (CEO), Roland Grenke, and Daniel Taschik. The founding team met each other in 2012 at a hackathon in Berlin.

They’ve hit it off immediately and started working on startup ideas soon after. One of them was Starlize, which allowed its users to create short-form music videos.

The app never really took off, but from that arose the concept for what ultimately became Dubsmash. And it made sure to not repeat the mistakes that plagued Starlize.

For starters, the Dubsmash team took their sweet time to talk to potential users (like their family members or university students). From that arose a much cleaner and simpler UX, which made the Dubsmash app extremely intuitive and easy to use.  

Next, they’ve learned that Starlize users preferred to exchange their videos privately, so Dubsmash integrated directly with the Facebook Messenger and WhatsApp.

Lastly, the team remained extremely lean, both on the people-count as well as with its engineering decisions. The external video sharing capabilities required users to save videos outside of the app (and Dubsmash only needed to store the sounds), which ultimately drove down infrastructure costs. 

The Dubsmash app was launched on November 19th, 2014. Within a week, it became the number one app in the German iOS store. 29 more countries followed in the weeks after.

As a result, Dubsmash’s app was downloaded close to 50 million after weeks of its launch. Many celebrities, such as Jennifer Lopez or Selina Gomez, became early adopters of the app and shared Dubsmash lip-syncs on their highly-frequented social media channels.

In August 2015, Dubsmash announced it has raised a $5.5 million Series A led by Index Ventures. It followed it up with a €9 million Series B round in December 2016. Dubsmash had to raise money because the company remained advertising-free and thus did not generate any revenue.

A much bigger problem was the fact that Dubsmash’s team, which grew to over 40 employees, did not know how to make its app sticky. Its users were simply seeing it as a utility for creating videos, but not staying on the app.

Furthermore, the product team built features with the mentality of “if you build it, they will come”, and deferred from its early strength of consistently talking to users. As a result, Dubsmash’s monthly retention rate plummeted to 5 percent.  

Lastly, Dubsmash’s extremely international and diverse user base made it hard for the startup to find resonance and deep user engagement with a specific demographic.

To get the company back on track, major reorganization initiatives were required. First of all, the firm dramatically decreased its headcount from over 40 to less than 10 employees. Two of them included co-founders Roland Grenke and Daniel Taschik, who left the company because of disagreements about the new strategic direction (led by Drüppel)

Next, the company moved its headquarters from Berlin to New York. It wanted to tap into a culture, which was able to adapt to the ever-changing requirements of a social media startup. Germany has traditionally been very process-driven and was simply lacking the pool of creative employees required.

The move also helped the company to deepen its focus on a set demographic. Dubsmash’s team decided to go after American teenagers. Additionally, it stopped relying on celebrities to create viral video content and instead turned to niche influencers that used the app on the regular.

One of them became dancers, who started using the app to display their dance moves with their following. The company employs a team of 10 full-time and contracted employees that then engage with its community.

They’d message them directly on Instagram and other platforms to get feedback on potential new features.

Dubsmash often even shared videos of these mini influencers on their social media accounts, further solidifying the relationship with their user base. Sometimes, they even launched dance competitions to award the best performers on its platform.

Lastly, the newly-established team, comprised of 15, spent one year to redesign the Dubsmash app. The new app was specifically designed to fit the interest of its niche user base.

As a result, Dubsmash’s retention rate increased by seven-fold to almost 35 percent. Nevertheless, the company had to face one more major blow. In December 2018, 162 million Dubsmash accounts were compromised and their data, such as unique email IDs, geographic locations, names, and passwords, were sold on the dark web.

Dubsmash furthermore raised a secret round of funding in 2019, adding another $6.75 million to its balance sheet. The round was led by Dubsmash’s existing investors.

The newly established focus helped Dubsmash to become number 2 behind TikTok in the video category. Today, more than 1 billion videos are viewed each month on the platform.

In mid-2020, rumors emerged that both Facebook and Snapchat were willing to acquire Dubsmash for hundreds of millions. So far, no deal has been disclosed.

How Does Dubsmash Make Money?

Right now, Dubsmash does not generate any revenue. The firm is able to survive because of investors continuing to pour money into the startup and due to the company’s low operating cost.

Dubsmash follows the same approach that many successful social media networks, such as Facebook or Snapchat, underwent as well.

Mark Zuckerberg, inspired by Sean Parker (founder of Napster), enforced a no-ad policy in the first few years of Facebook’s existence to keep the company’s ‘cool factor’ and focus on product-led growth.

As a result, Facebook only started heavily monetizing its user base from 2012 onwards, 8 years after the company’s creation.

Dubsmash follows a similar approach and has remained ad-free for the past 6 years. Whether the company sells it’s user data has not been reported on yet, so they should be given the benefit of the doubt.

In previous interviews, CEO Drüppel has hinted at various monetization ideas. They’ve included sponsored content for brands, in-video advertising, branded accounts, or premium features such as animations.

Dubsmash Funding & Valuation

According to Crunchbase, Dubsmash has raised a total of $20.2 million across 4 rounds of venture capital funding.

Notable investors into the company include the likes of Index Ventures, Lowercase Capital, Eniac Ventures, Balderton Capital, and more.

A valuation of Dubsmash has never been publicly revealed. Nevertheless, as reported by The Information, both Facebook and Snapchat were willing to pay “hundreds of millions of dollars” to acquire Dubsmash.

Hi folks, my name is Viktor! By day, I lead a tech team of 10 for an e-commerce startup. At night, I work on expressing my weird thoughts through this blog. And if there's time, I cuddle my cat..