In November 2020, with the pandemic in full force, British virtual events start-up Hopin declared that a new era of digital gatherings had begun.
Virtual events were “here to stay”, said founder Johnny Boufarhat, as he bragged that there were “more than 15,000 monthly events” available on Hopin’s “Explore” platform. Today, there are fewer than 500 listed.
Boufarhat’s vision made Hopin a pandemic sensation and Europe’s fastest growing start-up ever. Launched in 2019, his company rocketed to fame after Covid hit with a conferencing product that seemed tailor-made for lockdowns.
The 27-year-old raised more than a billion dollars for Hopin in little over a year, reaching a $7.8bn private market valuation that made him Britain’s youngest self-made billionaire on paper.
As top-tier venture capital firms like IVP, Andreessen Horowitz and Tiger Global clamoured to invest, Boufarhat sold $195mn worth of his own shares, according to a Financial Times analysis.
With Covid beginning to recede and publicly traded technology stocks being dumped by investors, Boufarhat now faces a moment of truth as he tries to build a sustainable business that lives up to the lofty expectations it set during the pandemic.
“The landscape will look very different going forward. People can now meet,” noted one events industry executive. They dismissed the pandemic-driven online events boom as “a bit of an artificial bubble”.
The slump in listings on Hopin Explore, envisaged as an “events marketplace” for virtual and hybrid gatherings but considered a “flop” by one former employee, is just one sign that Hopin faces harder days ahead.
In February, the company laid off 12 per cent of its staff, or about 138 people. Hopin has a fully remote workforce and no offices. At the time, Hopin said it was “reorganising to align with our goals for greater efficiency and sustainable growth”
The market price for Hopin shares fell 41 per cent during the first quarter on Zanbato, which operates a private secondary trading market, according to the company’s data. A broader index maintained by Zanbato fell 1 per cent during the same period.
Hopin softened the blow of the redundancies with generous severance packages, but the effort was undermined by comments Boufarhat made at a subsequent company-wide virtual meeting, according to people familiar with the matter.
One person briefed on the comments said Boufarhat had joked about the number of people present, saying: “I guess we got rid of more than I thought.”
Hopin said Boufarhat “immediately regretted his choice of words and apologised to the team”. It said that hybrid events remained a big area of opportunity for the company, adding: “As 79 per cent of event marketers in the EMEA are planning to host hybrid events in 2022, we’re currently executing on our vision to offer the most seamless, hybrid solution on one platform.”
Explore was launched to publicise events that were open for anyone to attend, but much of Hopin’s focus has now shifted to running invitation-only corporate events, such as sales meetings or employee get-togethers. It is also developing a broader range of tools, including for physical events.
The company said Hopin Explore was “a nice tool that we will likely dedicate more time and attention to in the future but it is not currently an area of focus.”
Hopin crossed $100mn in annual revenues last year and has not needed to spend much of the money it has raised, said one person familiar with the company’s finances
Boufarhat, who was born in Australia and later studied at University of Manchester, was a little-known UK-based budding entrepreneur who had raised only a seed round of funding for Hopin when the pandemic struck.
He has said the idea for Hopin originated in a bout of illness in 2015 that left him immunocompromised and at times confined at home. The experience got him thinking about networking online.
Boufarhat’s other ventures have included a curated written content discovery platform called Readory, and an online speed dating company called Quiin. Some of the code for Quiin was wrapped into Hopin, according to people familiar with the matter.
He blogged as well as coded. In one piece posted in 2016, he railed against “globalists”; another was titled “How Hillary Clinton Tried to Rig the Elections”. Hopin noted Boufarhat was 22 at the time, adding: “His views have evolved and he would not publish them today.”
When Covid arrived, Hopin rose as event organisers scrambled to move online to avoid cancelling events outright. Hopin offered more functionality for large gatherings and conferences than companies like Zoom. “The Covid situation helped the company jump really quickly,” said a second former employee.
As customers flocked to the company, so too did major investors and the extraordinary demand allowed Boufarhat to sell $195mn of his own shares, or about a fifth of his stake. He now owns just under 40 per cent of Hopin but retains voting control.
In a podcast last year, Boufarhat was candid about the leverage he has had with Hopin’s backers, saying that while he was always transparent with investors about the performance of the business, he disliked giving them contractual rights to information.
“I don’t want you over looking, over controlling, being able to ask for information whenever you want it, bothering our VP of Finance who is busy with an acquisition and three other things while we’re scaling at super fast speed,” he said on the Twenty Minute VC podcast.
Some of that rapid growth has come through acquisitions, most significantly in December 2020 when the company acquired live streaming site StreamYard for $250mn The move effectively doubled Hopin’s annual recurring revenue to $65mn at the time.
One venture capitalist who passed on investing in Hopin last year said they viewed the valuation as too high at the time because the business had been boosted by the StreamYard deal and Covid. They recalled Boufarhat arguing in response that Hopin was growing faster than its competitors.
Hopin said a StreamYard product for business customers launched last year had attracted customers like Amazon and Microsoft, and was “exceeding its goals”.
“Our investors believe in our vision to bring the world closer together, and we are in a strong financial position,” the company said. “We will continue to invest in our growth and building an impactful company.”
Additional reporting by Max Harlow and Tim Bradshaw