How IRL’s $1B Social Media Dream Unraveled:

[Harry]

Lessons for Startups

Social media has become an integral part of modern life, connecting billions of users worldwide. However, in recent years, platforms have faced challenges such as declining trust, algorithm fatigue, and calls for more authentic, meaningful connections. Amid these shifts, IRL (“In Real Life”) emerged as a promising alternative, aiming to create a new kind of social app focused on fostering genuine interactions and event-based connections.

But what started as a fresh approach to social networking ended with a shocking revelation: 95% of IRL’s users were fake. This revelation not only shattered the app’s credibility but also led to its eventual shutdown, marking a cautionary tale for startups in the social media space.

 

What Is IRL?

IRL was a social app launched in 2017 with the mission to help users connect over shared events and interests. Unlike traditional platforms, which often prioritize likes and followers, IRL positioned itself as a tool for creating meaningful, real-world interactions. The app gained traction, especially during the pandemic, as it pivoted to virtual events and online gatherings.

For more information, you can visit IRL’s website (now defunct).

IRL Overview:

• Founded: 2017

• Headquarters: San Francisco, California

• Core Offering: Event-based social networking

• Funding: Raised over $200 million, primarily from SoftBank’s Vision Fund

• Peak Valuation: $1 billion (Unicorn status)

• Mission: To foster authentic, meaningful connections through shared events

Key Highlights:

• Achieved unicorn status with a $1 billion valuation.

• Gained popularity during the pandemic by supporting virtual events.

• Garnered a significant user base with a focus on Gen Z and Millennials.

• Received funding from high-profile investors, including SoftBank’s Vision Fund.

 

What Was IRL’s Mission?

IRL aimed to transform social networking by focusing on real-world connections rather than digital clout. Its mission was to help people build authentic relationships through events, whether virtual or in person. The app envisioned itself as a counterbalance to the superficial engagement that defines many traditional social platforms.

 

How Much IRL Raised and Their Successes

IRL attracted significant investor attention, raising over $200 million from prominent backers such as SoftBank’s Vision Fund, Goodwater Capital, and Floodgate. These investments helped IRL achieve a $1 billion valuation, placing it in the coveted unicorn category.

The app’s milestones included:

• User Growth: Rapidly scaled its user base, claiming to have millions of active users.

• Pandemic Adaptation: Pivoted to virtual events during COVID-19, maintaining relevance.

• Generational Appeal: Positioned itself as a favorite among Gen Z and Millennials.

• Market Credibility: Secured funding from renowned investors, building a strong narrative around its growth potential.

Despite these achievements, IRL’s story unraveled when it became clear that its user metrics were grossly exaggerated.

 

How IRL Raised Investment

IRL’s fundraising success was rooted in its compelling vision and ability to address a perceived gap in the market. The app positioned itself as a disruptive alternative to traditional social media, with a focus on authenticity and community building. By showcasing strong user metrics (which were later found to be inflated), IRL convinced investors of its growth potential, aligning with trends of digital detox and meaningful connections.

 

Why IRL Failed and Lessons Learned

IRL’s downfall was swift and dramatic, highlighting critical failures that ultimately led to its closure. Below is a breakdown of what went wrong and actionable lessons for startups.

Failures and Solutions

• Fake User Metrics

  • Failure: 95% of IRL’s users were fabricated, leading to a loss of credibility and trust.

  • Solution: Implement robust data validation processes to ensure transparency and accuracy in user metrics.

• Overreliance on Vanity Metrics

  • Failure: IRL prioritized user growth numbers over genuine engagement, misleading investors and stakeholders.

  • Solution: Focus on meaningful metrics such as user retention, engagement quality, and event participation.

• Poor Governance

  • Failure: Lack of oversight allowed internal issues, including misleading data, to persist unchecked.

  • Solution: Establish strong governance structures with independent audits and accountability measures.

• Investor Pressure

  • Failure: Overambitious growth expectations led to risky decisions and inflated metrics.

  • Solution: Align growth targets with sustainable, long-term goals and maintain open communication with investors.

• Lack of Market Validation

  • Failure: Despite claiming significant user adoption, IRL failed to demonstrate real-world impact or demand.

  • Solution: Validate market fit through continuous feedback loops and pilot programs.

 

Warning Signs of a Company in Trouble

Here are key red flags that startups should monitor to avoid IRL’s fate:

• Exaggerated metrics without verifiable proof.

• Lack of transparency in reporting user data and financials.

• Overemphasis on growth at the expense of product quality and engagement.

• Weak governance and oversight, leading to unchecked internal issues.

• Investor pressure to scale without proper infrastructure or market fit.

 

Resources for Further Learning

If you’re interested in exploring IRL’s story further or learning more about building sustainable startups, check out these resources:

• TechCrunch: "IRL shut down after admitting 95% of its users were fake"

• EM360Tech: "What happened to IRL app"

• Fortune: "Venture capitalists on IRL’s startup failure"

• Trend-Mill: "IRL app collapses"

• Financial Times: "IRL’s fake users scandal"

IRL’s story serves as a cautionary tale about the importance of authenticity, transparency, and sustainable growth in the startup world. By learning from these mistakes, entrepreneurs can build more resilient and trustworthy businesses.