Social media startup IRL was at one point valued at around $1.2 billion. But now, as The Information reports, it's shutting down after an internal investigation found that a staggering 95 percent of its users were "automated or from bots."
According to the report, app founder and CEO Abraham Shafi repeatedly claimed over the course of several years that the app boasted roughly 20 million users. The company raised nearly $200 million from the likes of SoftBank's Vision Fund and Peter Thiel's Founders Fund, among others.
Following a series of reports by The Information, which questioned the app's advertised number of users, the company's board of investors suspended Shafi and launched an investigation, ultimately revealing that IRL user figures were almost entirely fudged. As a result, the app is to shut down entirely, and capital is to be returned to investors.
"Based on these findings," an IRL spokesperson told The Information, "a majority of shareholders concluded that the company's going forward prospects are unsustainable."
Writing on the Wall
There's a lot going on here, the least of which is the irony of an app called IRL having only a tiny proportion of real-life users. Twenty million users is a staggering number to fabricate, and the extent to which Shafi was able to fool veteran investment funds is almost impressive.
Per TechCrunch, IRL, which was first founded in 2018, had billed itself as a Gen Z-focused event-organizing app, which prioritized offline, interpersonal connection.
"If you look at the Internet, there's so much research around social media creating more separation and creating more walls and otherness," Shafi told Forbes in an October 2022 profile. "What we're focused on with IRL... is helping more people be together, become friends, or build community off of shared interest. It's the exact opposite of otherness."
But according to TechCrunch, the app has been mired in controversy for quite some time now. In April of last year, amid claims that it had enough cash to last through 2024, IRL abruptly laid off 25 percent of its workforce — a surprising move, considering the company had raised $170 million from SoftBank about a year earlier.
In retrospect, those layoffs look a bit like the writing was already on the wall.
More on the Forbes-profile-to-alleged-wrongdoing legacy: SBF and Friends Apparently Joked about Their "Tendency to Lose Track of Millions of Dollars in Assets"
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