Popular Unicorn Social App IRL Faces Closure as It Discloses That 95% of Its User Base Consists of Fakes
IRL Social App Faces Closure as Overwhelming Majority of Users Turn Out to Be Fake
chandni
In a surprising turn of events, the popular social app IRL has found itself grappling with a significant problem – the vast majority of its reported 20 million users are not real individuals. An internal investigation conducted by IRL's board of directors recently revealed that approximately 95% of the app's user base consists of automated accounts or bots, according to an initial report by The Information. Consequently, the company has made the decision to shut down its operations after raising over $200 million in venture capital.
Initially positioned as an appealing alternative for Gen Z users seeking event organizing platforms in lieu of decreasing Facebook usage, IRL had seemed poised for success. However, the company's internal issues became increasingly apparent following its impressive $170 million Series C funding round, led by SoftBank, which valued the company at $1.17 billion.
Signs of trouble emerged last year when IRL laid off around 25 employees, accounting for 25% of its workforce. This came as a shock, considering the company had significantly expanded its team in the preceding year. In a memo to the employees, obtained by TechCrunch, former CEO and founder Abraham Shafi urged them to "adapt" and "be disciplined," drawing parallels to WhatsApp's growth to 450 million users with a much smaller team of just 55.
Shafi's memo contained numerous extravagant analogies, likening the journey to success to winning an Olympic gold medal and acknowledging that not everyone would desire to tread the same path. Despite the CEO's assurances that the company had sufficient funds to sustain itself until 2024, with more than $100 million reportedly in the bank, the current financial situation remains uncertain. A spokesperson for IRL stated to The Information that the company intends to return its capital to its shareholders.
As concerns about the veracity of IRL's user numbers arose, employees began to doubt Shafi's claim of 20 million monthly active users. The Securities and Exchange Commission (SEC) subsequently launched an investigation into potential violations of securities laws by IRL. By April, the board of directors had suspended Shafi and appointed an acting CEO to navigate the company through this challenging period.
