Tag Archives: Social Media App Failure

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Setting up a business was never been easier, but you can spoil it very fast – and for various reasons. You have the funding, you have the ideas, and you have the zeal. But, none of this ensures your startup will survive in today’s ultra-competitive business environment.

Most of the startups (almost 50%) fail because there was no market demand (like Hailo – the on-demand taxi application) but what about the others? Here is the failure story of YikYak to make you understand that the industry buzz and a large user base don’t really ensure success. To be successful you also have to increase revenues and profitability of your business alongside providing phenomenal experience to your users from day one.

Let’s first put some spotlight on the brighter side of YikYak:

What Exactly Was YikYak?

YikYak was a social application for Android and iOS that enabled users to make and share posts anonymously with any individual who was inside a 5-mile radius. Users inside the range could also see, like or dislike the content anonymously. The application was especially trending in schools and colleges, frequently utilized for gossiping and sharing updates or events.

The app was valued at $4oo million in 2014 after raising more than $73 million in only 3 rounds of funding. At its peak time of success, the app was considered as the darling of the anonymous messaging space. In 2017, the application closed its doors. Here are the reasons behind its demise.

4 Reasons Behind the Failure of YikYak – an Anonymous Chat App

1. They Faced Legal Issues

One of the primary reasons that drove the founders of YikYak to cease the application seems to be the continuous complaints about cyberbullying and harassment through the application, prompting complex legitimate issues. Feminist groups, parents and victims of harassments, specifically, asked for schools and colleges to block the application.

2. They Slowly Lost their USP – Anonymity

To avoid the lawful issues, the application developers chose to get rid of anonymity and mandated creating user profiles in 2016. This estranged their users which hurt their usage, rating and growth. When they mandated that users make handles and shed their anonymity, users typically left the application in droves. Even when the founders understood their blunder and re-presented anonymity, the application had lost its critical mass and the clients that returned found a phantom town.

3. They Decreased their User Base

By cutting off teenaged clients trying to control harassing, Yik Yak gave a large chunk of their user base. The application got banned in a number of colleges and school and people started finding that there is no use of using the app somewhere outside. As a result, their user base decreased.

4. They Faced a Negative Cash Flow

Because of the implementation of handles, the removal of specific features, no appropriate monetization strategy and the wide coverage of news media of digital bullying, the founders were not able to raise more money. As a result, the company started running on negative cash flow and they had to fire a big chunk of their employees (60% according to the Verge).

All of the above reasons combined with the success of other emerging social networks like Instagram and Snapchat, put the application in its grave. These elements gradually prompted a decrease in the utilization of the application and its inescapable closedown.

Key Takeaways from the Failure of YikYak

Think about Potential Problems In Advance

You think your idea is cool. Its bright side will never let you think about its dark side. But, as an entrepreneur, you have to look at both the side and create a balance to manage and handle things properly.

Fundraising is Just a Tool

Yes, fundraising is important for every startup to expand the customer base and grow talent. But, the growth of the business is something else and equally important. We should directly relate the growth of our business to profit and revenue in order to maintain positive cash flow.

Never Lose Your USP

In this highly competitive business world, your challenge is to differentiate yourself to guarantee you stand apart from your rivals. Therefore, always have a unique selling point in your business and never ever lose that.

Make Sustainability the End Goal

Making a sustainable business model and the product helps manage burn rate and find approaches to achieve key objectives. Your business should always have a sustainable business model.  Facebook was valued at $1 billion when Yahoo tried to acquire it. Rather than selling, it figured out how to monetize and became profitable.

Wrapping Up

What can you learn from the failure of YikYak? Well, for startups, focus on every one of the details! If you consider starting your own business, you should remember about the key positions. Legal issues, gathering new users and generating revenues may turn out to be difficult. But, you have to learn from the failures and proceed ahead with confidence!