The San Francisco social media startup IRL — a once-hyped “unicorn” valued at $1.17 billion — has shut down for good after a year filled with internal tumult and external scrutiny.
An investigation initiated by the startup’s board of directors confirmed allegations made by multiple employees: 95% of its users were bots or otherwise automated. The revelation — and the ensuing shutdown — was first reported by the Information, which also found that CEO Abraham Shafi was suspended in April for alleged misconduct.
Elliot Sloane, a spokesperson for IRL, confirmed to SFGATE that the company will be dissolved and a majority of its assets will be moved into a liquidating trust.
“The shareholders elected to take this action — proposed by the Board — as a result of a Special Committed investigation that found that 95% of identified users were in fact automated or from bots, not authentic human users among other findings,” Sloane told SFGATE in a statement Friday afternoon. “Based on these findings, a majority of shareholders concluded that the company’s going forward prospects are unsustainable.”
The startup, founded in 2016, centered around a group chat app that encouraged its users meet “in real life” — hence the company’s moniker. SoftBank’s Vision Fund 2 led a $170 million funding round in June 2021 that put the company’s valuation past that $1 billion mark. In 2022, Shafi boasted in multiple interviews that nearly 20 million monthly active users were on the platform. (The investigation all but confirms that Shafi’s claims were hugely inflated; the number of actual users is likely in the ballpark of one million.) “What we’re building isn’t the media part of social, it’s the real human interaction part of social, because that hasn’t been paid attention to as much,” Shafi told TechCrunch in 2021.
Even as Shafi received glowing coverage in Forbes and GQ Middle East, troubles were mounting at IRL. Last May, an exposé by the Information reported that some employees were skeptical of the user count he touted. A month later, he laid off a quarter of the company’s employees; he assured staff that the company would have enough runway to last them through 2024. By December 2022, the U.S. Securities and Exchange Commission launched an inquiry into the company.
Perhaps the final blow: An employee filed a lawsuit in April alleging that the company’s user base was inflated by bots and that he was retaliated against for speaking out about it.
Sloane added that the Silicon Valley firm Sherwood Partners will help with a “plan of liquidation” to distribute the company’s remaining cash. The IRL website is still active, but the app has been removed from the iOS app store. (It is still available on the Google Play Store for Android devices.)
IRL’s parent company, Live Awake, also operates the meme-making app Memix, which appears to still be active. According to Shafi’s LinkedIn, his connection to Memix has also ended as of June 2023.
Hear of anything going on at IRL or Memix? Contact SFGATE tech editor Joshua Bote securely on Signal at 707-742-3756 or email him at joshua.bote@sfgate.com.
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