Koo shuts down: Inside the rise and fall of Indian Twitter rival Koo

Homegrown social media platform Koo, which had pitched itself as a rival to X (previously Twitter) has shut shop as talks for an acquisition by internet companies like Dailyhunt did not fructify into a deal.

Here’s a quick recap of the four-year-old social media platform’s journey.

What didn’t work?

Cofounders Mayank Bidawatka and Aprameya Radhakrishna penned a note about making “tough decisions” and why they decided to bid a “final goodbye”.

The duo said talks for a partnership with various entities to keep Koo afloat failed. While they would have liked to keep the app running, “the cost of technology services to keep social media app running is high and we’ve had to take this tough decision”.

“Unfortunately for us, the mood of the market and the funding winter got better of us,” the note mentioned as the founders signed off saying, “the little yellow bird says its final goodbye” in a reference to Koo’s yellow bird logo.

Koo’s rise as Twitter alternative
At its peak, Koo grossed over 2.1 million daily active users, about 10 million monthly active users, and over 9,000 high profile personalities from various fields were active on the app.“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 cofounders said.

Radhakrishna, who built ride-sharing company TaxiForSure (which was acquired by Ola for $200 million in 2015) cofounded Koo — a multilingual microblogging platform — in early 2020.

The app rose to prominence around 2021 amid the Indian government’s spat with Twitter and growing calls for expanding the ecosystem of homegrown digital platforms.

Koo’s steep growth in user metrics was also driven by union ministers and government departments publicly endorsing the homegrown microblogging firm.

It even claimed to have one of the highest ARPU (average revenue per user) per daily active user compared to Indian social media companies and global competitors.

Funding winter takes a toll
A prolonged funding winter, which has led to a valuation reset in the startup ecosystem, hit Koo at its peak, hurting expansion plans and forcing it to cut down its growth trajectory.

The lack of funds also led to the company letting go of about 30% of its 260-strong workforce over the course of last year.

The Accel and Tiger Global-backed company was struggling to raise funds amid a tough macroeconomic environment. It also held several rounds of talks for a potential sale or merger with multiple companies, including Dailyhunt. However, talks didn’t fructify.

“Most of them didn’t want to deal with user-generated content and the wild nature of a social media company. A couple of them changed priority almost close to signing,” Bidawatka said in the note.

Why social media proves to be a tough nut to crack?
Koo is one of many companies that have tried and failed to disrupt the social media landscape with homegrown apps.

Local social media platforms like Mohalla Tech’s ShareChat and Moj, and VerSe Innovation’s short-video platform Josh, have met with a similar fate, underscoring the capital-intensive nature of the industry.

ShareChat has seen a significant scale-down in operations and has undertaken severe restructuring, including large-scale layoffs. The company’s valuation has plunged more than 60% to below $2 billion from its peak of $5 billion in 2022. This is one of the steepest valuation cuts for a venture-funded startup, which has raised around $1.3 billion so far.

Similarly, VerSe Innovation laid off around 150 people from its 3,000-strong workforce in November 2022, besides implementing salary cuts for some employees. The firm had last raised $805 million at a $5 billion valuation.

Monetisation continues to be a challenge for these platforms which are losing users to Instagram Reels and YouTube Shorts.