IRL shutting down, a social app designed to connect young people and discover events, seemed to have a promising future. Overcoming the challenges of operating an event discovery platform during the COVID-19 pandemic, IRL adapted by incorporating online event discovery alongside its original concept.
The company’s founder, Abraham Shafi, reported a user base of 20 million and secured significant venture capital funding of over $200 million.
However, a recent report from The Information revealed a troubling issue: the majority of IRL’s user base nearly 95 percent appears to be fake.
Internal skepticism among IRL employees regarding user base claims led to an investigation by the board of directors after Shafi’s suspension in April.
The findings were alarming. The board discovered that a staggering 95 percent of the supposed 20 million users were either automated or bots, casting doubt on the credibility of IRL’s numbers.
The Securities and Exchange Commission (SEC) has initiated an investigation to determine if IRL misled investors and violated securities law.
Unfortunately, instances of misrepresented user numbers are not uncommon in the tech industry. Earlier this year, JP Morgan sued the founder of Frank, a startup it acquired for $175 million, for falsely reporting user figures.
IRL, despite securing a substantial investment of $170 million from SoftBank in June 2021, leading to a valuation exceeding $1 billion, faced a significant setback.
Just a year later, the company laid off 25 percent of its workforce. In an attempt to reassure the remaining staff, Shafi claimed the company had sufficient cash reserves to sustain operations until 2024.
Regrettably, IRL has now made the decision to shut down. Users who visit IRL.com today are greeted with a message announcing the app’s closure, effective June 27.
It marks a disappointing end to a venture that initially showed great promise but ultimately faced serious challenges regarding the authenticity of its user base.
