SoftBank Provides $170m Investment to Social App with Questionable User Base
In 2021, SoftBank, a prominent Japanese investment firm, propelled IRL, a relatively unknown social media platform, to unicorn status and a total worth of $1.17 billion by injecting more than $170 million. However, it has been revealed that the app fabricated its user figures, with 95 percent of its claimed 20 million user base being non-existent, as initially disclosed by The Information.
At the time, SoftBank called the app “an innovative event-based social network” that “allows people to do more together.” However, the company didn’t know there weren’t real people out there doing more together. There were no people at all, just open bots and automated accounts.
The app markets itself as an event-organizing alternative to Facebook aimed at younger generations who think Mark Zuckerburg’s social network is for squares and old people. Despite the name, IRL quickly turned to online events after the pandemic made it almost impossible to meet in real life.
Problems began to mount almost immediately after receiving those millions from SoftBank. Last year, the company laid off 25 percent of its team, and founder Abraham Shafi encouraged employees to “adapt” and “take discipline,” adding that “most people don’t want to be Olympians. In the same way, not everyone wants to walk the path we walk.”
After that, employees began to doubt Shafi’s claim of 20 million monthly active users. That’s when the SEC stepped in and began an investigation into whether IRL misled investors. In April of this year, the company’s board dismissed Shafi and appointed a new acting CEO.
With inflated numbers and a half-baked concept, the IRL is shutting down and taking its 19 million robots with it. The company says it will return capital to shareholders, but no one knows how much money is left in the coffers. Shafi once said the company had “more than enough money to last until 2024,” but he also cited 20 million active users, so, you know, salt and all.
It’s been a tough week for SoftBank. The company also invested nearly $400 million in a company that makes robotic pizza makers. The company shut down and liquidated its assets, again leaving a giant question mark over how much SoftBank would recoup from its initial investment. This represents a potential loss of $500 million in one week. But don’t worry about SoftBank, the company owns dozens of tech companies and recently sold Boston Dynamics for a cool billion. It’s still pretty embarrassing.
