In real life, IRL's BS caught up with them

Remember when IRL was a unicorn, a startup that before it hit the market - but after the "smart money" was pouring in - was valued at $1B?

Me neither.

In truth, in my own personal real life, I'd never heard of IRL until a few weeks ago.

But two years ago, they were riding in pretty high. 

In June 2021, they announced a chunky infusion of "growth round" capital from Softbank and others. 

And, voila, all of a sudden IRL hit unicorn status.

Here's what IRL - which is aimed at the younger, cooler folks, thus it's no surprise that I wasn't familiar with them - was up to:

The startup began its life as a tool for discovering real-world events — an industry that went to zero almost overnight due to the COVID-19 pandemic. That could have been the end for IRL, but the startup quickly pivoted to prioritize the discovery of online events instead. Under COVID lockdowns, users could turn to the app to find things like livestreamed concerts, esports events, Zoom parties, and more.

IRL focused on pulling in popular online events from places like Live Nation, Twitch, YouTube, TikTok and others.

As a result, IRL became more accessible because its audience was no longer limited only to those who had time and money to travel to real-world events.

That focus also helped the app to attract a crowd of younger users who are of the generation that doesn’t use Facebook.

“They essentially use Snapchat, Instagram and TikTok,” explains [founder/CEO Abraham] Shafi. “But there is no groups and events product for that generation,” he points out. (Source: TechCrunch 6.15.21)

And as in person events started to rebound, the company was right back in the physical events space.  

IRL was growing like crazy, with growth that was almost unbelievable: 400% growth over the 15 months prior to the Schedule C round. IRL had 20 million users - 12 million of them active on a monthly basis. And, with more cash in their coffer, the company was ready to start scaling and growing even crazier. 

Things started to cool off a bit in 2022, when IRL laid off 25% of their employees. That was only 25 folks, but Shafi was sure that they could scale, and order-of-magnitude up their user count with a lean, mean, fighting machine staff that was more adaptable and disciplined than the sluggards who were let go.

Do more together was the company's tagline, promising users that IRL would be your group messaging app, your place to discover groups and events.

Turns out that there weren't many "yous" out there. 

Turns out that almost all of them - 95% of all those "yous," those 20 million users - were "automated or from bots."

Oh.

Safi and IRL aren't the only companies who've goosed their numbers.

Earlier this year, there was the case of Charlie Javice, whose company, Frank, helped college students deal with the financial aid process. Frank was acquired by JP Morgan, which wanted to get its marketing hands on Frank's 400,000 users. Turns out that Frank was less than Frank about its users: 70% of them didn't exist. (I posted about this situation here.)

But claiming 20M users, 95% of which don't exist, is obviously a bigger goose than faking a measly 280,000 college stuents. 

Anyway, a couple of weeks ago - on June 27th - IRL shut down. As of midnight that day, the app no longer existed. Which, of course, didn't exactly inconvenience all that many folks, given that 95% of the claimed user base didn't exist. 

With IRL's shutdown, so went another unicorn. 

Hmmmm. Unicorn unicorns (the non-animal) don't actually exist IRL. But unicorn businesses are just rare, not non-existent. However, in this case, the non-existent label fits. 

IRL's disappearing act is a far cry from what Shafi was crowing about when he thought his unicorn was well on its way to becoming a bona fide success in real life. In his gushing post-layoff memo to last year's layoff survivors, here's what he had to say:

“Becoming one of these iconic, impactful companies is akin to winning a gold medal in the Olympics. In fact, probably more challenging,” Shafi wrote in the memo, which was full of similarly outlandish analogies. “Like the Olympics, we know most people don’t want to be Olympians. In the same way, not everyone will want to walk the path we are walking. But for those that want to push their limits and find out what they are capable of, this culture is for you.” (Source: Tech Crunch 06.26.23)

The only good news is that, whatever money's still in the bank will be returned to investors.

But there's not much that's positive about this one. 

Sorry, Abraham Shafi. No iconic. No impactful. No gold medal for you. Instead, there may well be legal action based on fraud.

All that BS about your users has caught up with you. Faking it only takes you so far. Your unicorn turned out to be nothing but a pony painted white, with a horn glued on to its head.