The Rise and Fall of IRL: The Social App That Turned Out to Be Too Good to be True

In a surprising turn of events, the once-promising social app IRL has announced its shutdown after admitting that a staggering 95% of its reported 20 million users were fake. The company, which had raised over $200 million in venture capital, found itself unable to sustain its growth and maintain its credibility. In this article, we’ll delve into the rise and fall of IRL, exploring its aspirations to become a Gen Z event organizing alternative, the internal struggles it faced, and the ultimate downfall that led to its closure.

I. IRL’s Ambitious Plans and False Userbase

• IRL, a social app positioned as an event organizing alternative for Gen Z, aimed to capture the market share of Facebook, which had been losing appeal among younger users.
• The company’s board of directors conducted an internal investigation, revealing that an astounding 95% of IRL’s reported 20 million users were either automated or bots.
• Despite raising significant funds, the revelation of a fake userbase led to the inevitable decision to shut down the app.

Table 1: IRL’s Userbase Breakdown

II. Internal Struggles and Layoffs

• IRL experienced rapid growth and raised $170 million in its Series C funding round, valuing the company at $1.17 billion.
• However, internal troubles emerged, leading to the layoff of approximately 25% of the team, despite a previous significant increase in headcount.
• Former CEO and founder Abraham Shafi urged remaining employees to adapt and be disciplined, drawing comparisons to successful companies with lean teams.

III. Decline and Investigations

• Doubts arose among IRL employees regarding the accuracy of the claimed 20 million monthly active users, coinciding with an investigation by the Securities and Exchange Commission (SEC) into possible securities law violations.
• In response to these concerns, the board of directors suspended Shafi and appointed an acting CEO, as the company’s credibility continued to erode.

IV. Financial Strains and Capital Return

• Formerly confident in its financial stability, IRL’s management claimed to have “more than enough cash to last well into 2024,” with over $100 million in the bank.
• However, as the exact remaining capital remains unknown, IRL has stated its intention to return any remaining capital to its shareholders.
• The closure of IRL highlights the significant impact of false user numbers on the sustainability and reputation of a social media platform.

Frequently Asked Questions (FAQ)

Q1: What was IRL’s objective as a social app? IRL aimed to provide an alternative for Gen Z in event organizing, offering a platform separate from Facebook.

Q2: How much funding did IRL raise? IRL raised over $200 million in venture capital, with a significant amount coming from its Series C funding round led by SoftBank.

Q3: What led to IRL’s downfall? The revelation that the majority of IRL’s reported users were fake, coupled with internal struggles, doubts about user numbers, and an SEC investigation, contributed to the company’s ultimate closure.

Q4: Will IRL’s remaining capital be returned to shareholders? Yes, IRL has announced its intention to return any remaining capital to its shareholders.