Social media startup Koo, which had positioned itself as the homegrown alternative to X (formerly Twitter), is shutting down its service after prolonged talks for an acquisition failed.
"We explored partnerships with multiple larger internet companies, conglomerates and media houses but these talks didn't yield the outcome we wanted. Most of them didn't want to deal with user generated content and the wild nature of a social media company," Koo co-founders Aprameya Radhakrishna and Mayank Bidawatka said in a LinkedIn post on July 3.
"A couple of them changed priority almost close to signing. While we would've liked to keep the app running, the cost of technology services to keep a social media app running is high and we've had to take this tough decision" he said.
Koo was started by Radhakrishna and Bidawatka in 2019 and was launched in March 2020. It gained prominence amidst the standoff between the Indian government and Twitter (now X) in 2021 over the former's takedown requests related to farmer protests.
The microblogging platform also forayed into Brazil in November 2022.
In the LinkedIn post, the founders said they built a "globally scalable product in a fraction of the time that X/Twitter did, with superior systems, algorithms, and strong stakeholder-first philosophies"
"We were just months away from beating Twitter in India in 2022 and could have doubled down on that short term goal with capital behind us" the founders said.
Koo will now evaluate making its assets into a digital public good to enable social conversations in native languages, around the world, the founders said in the post.
"This is very difficult and complicated tech and we've built it painstakingly in record time. We will be happy to share some of these assets with someone with a great vision for India's foray into social media" they said.
The trouble begins
The tough times at Koo started back in September 2022 when Koo first fired around 40 employees. Then, in February 2023, co-founder Bidawatka warned employees that more layoffs were coming. Shortly after that, in April of the same year, the company trimmed 30 percent of its workforce – most of them were forced to resign, Moneycontrol had reported earlier.
In the same month, its monthly active users (MAUs) dropped to about 3.1 million, the third straight month of decline in that year. Prior to that, in January 2023, Koo’s MAUs were around 4.1 million, which fell closer to 3.5 million in February and dropped again to about 3.2 million in March.
The 3.1 million MAUs in April 2023 was just about a third from a peak of 9.4 million in July 2022, when X (formerly Twitter) and the Indian government were involved in a legal tussle.
The founders claimed that Koo had about 2.1 million daily active users and around 10 million monthly active users at its peak. It also claimed to have over 9,000 VIPs, including some of the most eminent personalities across various fields, on the platform,
"A prolonged funding winter which hit us at our peak hurt our plans at the time and we had to tone down on our growth trajectory" the founders said in the LinkedIn post today.
"Social media is probably one of the toughest companies to build even with all resources available as you need to grow users to a significant scale before one thinks of revenue. We needed 5 to 6 years of aggressive, long term and patient capital to make this dream a reality" they said.
The Tiger Global-backed company had raised $65 million so far from Accel, 3one4 Capital, Naval Ravikant, Balaji Srinivasan, Kalaari Capital and several others.
Failed acquisition talks
In recent months, Koo had engaged with startups like Dailyhunt and Sharechat for a potential buyout, but those talks did not fructify over time. Even as the founders were scouting for new partners, they had admitted going was getting tough.
“We have gone to the extent of the founders putting in a substantial amount from their personal funds so that salaries for March can be met,” Bidawatka had said in an earlier social media post.
“...future salaries can only be paid out once the partnership is concluded. This transparency helps them resort to options that work best for them,” he added.
While the number of users who came on to the platform reduced over time, another reason why Koo had to shut shop was because it failed to control its monthly cash burn. That was despite at least two rounds of layoffs and other cost cutting moves.
Koo did manage to reduce its monthly cash burn to around Rs 10.2 crore in April 2023, from roughly Rs 16 crore in January 2023, Moneycontrol had reported earlier.
The monthly cash burn of Rs 10.2 crore in April 2023, however, is far from the target of Rs 6.5 crore Koo had set for itself by March-end of that year.
"The mood of the market and the funding winter got the better of us. Timing the market is an underestimated variable. It can define and discount everything at times. Koo could have easily scaled internationally and given India a global brand that was truly made in India. This dream will remain" the founders said in the LinkedIn post.
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