IRL’s CEO Steps Down After Allegation of Inflated User Numbers
THE TAKEAWAY
• The company has been under investigation by the Securities and Exchange Commission following The Information’s report last year about employee concerns
Abraham Shafi has stepped down as CEO of messaging app IRL following allegations that the company used bots to inflate the users it reported publicly and to investors, according to a person with direct knowledge.
The abrupt change happened after The Information reported a former employee alleged he was fired after expressing concern that a high percentage of IRL’s 20 million claimed users were bots. He researched the matter inside the company, which raised around $200 million from investors including SoftBank Vision Fund and Founders Fund, after The Information’s May 2022 report that other employees had expressed similar concerns. The Securities and Exchange Commission has been investigating whether the company violated securities laws, including in the way the startup described its business performance during talks with investors.
Shafi told The Information at the time of the May 2022 report that external measures of the app’s popularity, which showed much lower usage compared to the company’s user claims, didn’t account for teenagers and web visitors. Shafi couldn't immediately be reached for comment on Friday.
IRL’s app—whose name stands for “in real life”—allows users to chat about shared interests and plan real-world events. The seven-year-old startup raised capital from investors including SoftBank, Floodgate Fund, Goodwater Capital and Founders Fund, most recently in 2021, when it was valued at $1.2 billion after an investment. Kleiner Perkins and Dragoneer Investment Group also invested in the company, according to PitchBook