Insights
Collapse of Bot-Heavy Social Network IRL Shows Importance of Independent Metrics
Social app IRL shut down in June after an internal investigation found its audience was 95% bots. Now Softbank is suing.
Social app IRL turned out to be a digital version of a story that’s too good to be true. Tech investment powerhouse Softbank just filed a lawsuit for $150 million in damages, claiming it was deceived by falsified usage numbers that seemed to show rapid, organic growth back in early 2021 when Softbank led a $170 million investment round in IRL. At the time, IRL’s estimated valuation was $1.1 billion.
In June, IRL shut down following an investigation by its own board that found about 95% of the social network’s claimed 20 million active users were bots. Sadly, this is not the first time we’ve heard of major investor groups being led astray by self-reported and exaggerated user counts.
If Softbank was evaluating a deal like that today, we suspect they would take more time to consider external estimates of digital engagement. Consider these from Similarweb:
- In the US, combined Android and Mobile app monthly active users of IRL peaked at about 3.3 million in September 2021, according to Similarweb estimates. That dropped to less than 1 million by mid-2022 and was down to less than 500,000 and falling by 2023.
- On a few occasions, unique visitors to the irl.com website topped 500,000, but it averaged less than 170,000 in 2021 and was down to an average of about 80,000 monthly users in 2023.
- According to the lawsuit, in April and May of 2021 when Softbank was evaluating its potential investment, IRL claimed to have 12 million monthly active users. At that time, IRL was drawing about 75% of its audience from within the US, according to web metrics, yet had only about 1 million monthly active users in the US for iOS and Android, combined, as of May 2021, according to Similarweb estimates.
In other words, IRL was not quite the growth machine it claimed to be.
Independent metrics raised the alarm
External estimates are what eventually made Softbank suspicious, TechCrunch reported in its story on the lawsuit:
When SoftBank accessed a third-party report on IRL’s total users and downloads, the data said that by spring 2021, IRL had only been downloaded 9 million times. Shafi, on the other hand, was claiming that the app had 12 million monthly active users, and that 2 million events got planned each day on IRL. Shafi explained away this discrepancy by saying that the number accounted neither for web sessions, nor underage users, whose data could not be shared.
“In reality, the platform was a virtual ghost town, filled with bots deceptively mimicking active human users,” SoftBank wrote.
One reason external estimates like those from Similarweb are important is that they tend to be relatively bot-free. As part of research conducted last year on bot versus human activity on Twitter (back when that was an issue in Elon Musk’s efforts to withdraw from his proposal to take over the company), our data scientists concluded that less than 1% of the activity tracked in our model was machine-generated.
The truth: dwindling app usage
IRL does seem to have enjoyed a burst of popularity, particularly in mid-2021, but it didn’t last.
Meanwhile, on the web
A similar pattern played out on the web. By June and July, most of the visitors to the website were probably going there to find out what had happened to the app, which shut down in June.
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