In a stunning turn of events, social media app IRL, once hailed as the next big thing, has admitted to fabricating its user numbers, revealing that 95 percent of its claimed 20 million user base was fake. The app, which SoftBank invested over $170 million in, achieved unicorn status and a valuation of $1.17 billion in 2021. However, it now appears that the app was built on a foundation of bots and automated accounts, with no actual users engaging with the platform.
SoftBank, the Japanese investment giant, had touted IRL as an innovative event-based social network, emphasizing its ability to bring people together. Little did they know that the vast majority of the user base was nonexistent. The app positioned itself as an alternative to Facebook, catering to younger generations who viewed Mark Zuckerberg’s social network as outdated and unappealing. Originally focused on organizing real-life events, IRL quickly shifted its strategy to online events due to the COVID-19 pandemic.
?Unicorn social app 'IRL' is shutting down after admitting 95% of its users were fake!
This app had raised $200M from top investors including Softbank.
Here's the crazy story of how it all went down ? pic.twitter.com/QmLtslrFNL
— Alex Valaitis (@alex_valaitis) June 27, 2023
Almost immediately after securing the significant investment from SoftBank, IRL encountered numerous challenges. The company laid off 25 percent of its workforce, and doubts began to emerge among employees regarding the accuracy of the claimed user numbers. As a result, the Securities and Exchange Commission (SEC) launched an investigation into whether IRL misled investors. In April of this year, the company’s board suspended founder Abraham Shafi and appointed a new acting CEO.
Ultimately, IRL’s inflated user numbers and flawed concept led to its downfall, forcing the company to shut down. The app will be returning capital to shareholders, but the exact amount of remaining funds is uncertain. Shafi had previously stated that the company had sufficient cash to last until 2024, but given the misinformation surrounding user numbers, this claim is met with skepticism.
SoftBank has had a rough week, with another significant investment, this time in a company manufacturing robot pizza makers, also ending in failure. As a result, the firm faces potential losses totaling $500 million in a single week. Despite these setbacks, SoftBank remains a major player in the technology industry, owning numerous tech companies and recently selling Boston Dynamics for a significant sum. Nevertheless, the recent turn of events is undoubtedly an embarrassing episode for the investment giant.
