After lengthy negotiations for an acquisition broke down, social media company Koo is discontinuing its operations. Koo had established itself as the domestic alternative to X (previously Twitter). Even with over $60 million in investment from big investors like Accel and Tiger Global, Koo failed to turn a profit in the last year. It wasn’t successful in increasing its user base to a considerable degree.
Aprameya Radhakrishna and Mayank Bidawatka are the founders of Koo. They mentioned difficulties in establishing alliances with bigger media companies, conglomerates, and online businesses. Due to the unpredictability of social media business and user-generated material, many potential partners were reluctant to interact.
The Tough Times For Koo
Koo encountered several difficulties in September 2022, starting with the termination of forty workers. Co-founder Bidawatka informed staff members in February 2023 that there would be layoffs. In April of that year, the company’s headcount was 30% less. In April of that year, the company’s monthly active users (MAUs) fell to 3.1 million. It further marked the third consecutive month of decrease. This is only around one-third of the peak of 9.4 million in July 2022, during a legal dispute between the Indian government and X. At its height, Koo had over 9,000 VIP members, 2.1 million daily active users, and 10 million monthly active users. The business, backed by Tiger Global, raised $65 million from several investors.
“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 stated.
“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 mentioned.
Failed Acquisition
Koo had to close after two rounds of layoffs and cost-cutting efforts. That was because it was unable to control its monthly cash burn. The company has discussed a possible takeover with companies such as Dailyhunt and Sharechat. These discussions came to no fruition. The founders had acknowledged that times were hardening even as they searched for new business partners. As Moneycontrol had previously reported, Koo was able to lower its monthly cash burn to around Rs 10.2 crore in April 2023 from roughly Rs 16 crore in January 2023, despite the decline in user numbers. But in April 2023, Koo’s monthly cash burn of Rs 10.2 crore is a far way from the Rs 6.5 crore goal it had set for itself by the end of March of the same year.
Founders On Failed Acquisition Of Koo
“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 stated. “…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 continued.
“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” founders wrote.
Stance Of The Founders Of Koo
“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 stated 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.”
The founders also stated on LinkedIn that they created a “globally scalable product with superior systems, algorithms, and strong stakeholder-first philosophies in a fraction of the time that X/Twitter did.” “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” according to the founders.
According to the founders’ stance, Koo will now assess turning its assets into a digital public benefit in order to facilitate social talks in peoples’ local tongues all around the world. “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 added.
Koo
Radhakrishna and Bidawatka founded Koo in 2019, and it was first made accessible in March 2020. It became well-known during the 2021 Twitter (now X) takedown dispute between the Indian government and the platform. The dispute was over demands to remove content relating to farmer protests. In November 2022, the microblogging site also ventured into Brazil.
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