How Koo failed even after Indian government’s support?

The Indian microblogging platform Koo, which positioned itself as a homegrown alternative to Twitter (now X), has announced its shutdown. The decision follows failed acquisition talks, leaving the company unable to sustain its operations due to financial pressures.

Co-founders Aprameya Radhakrishna and Mayank Bidawatka shared the news in a LinkedIn post on July 3, 2024. They detailed the challenges that led to this decision. "We explored partnerships with larger internet companies, conglomerates and media houses, but these talks didn't yield the outcome we wanted," they stated. "Most of them didn't want to deal with user-generated content and the wild nature of a social media company."

Rise of Koo

Koo gained traction during the 2021 standoff between the Indian government and Twitter over content moderation related to farmer protests, after being launched in March 2020 by Radhakrishna and Bidawatka. As officials and celebrities flocked to the platform, Koo positioned itself as a champion of free speech and digital sovereignty.

At its peak, Koo had impressive user statistics. The founders claimed the platform had about 2.1 million daily active users and around 10 million monthly active users. They also reported having over 9,000 VIPs from various fields actively engaged on the platform.

The company expanded beyond India, entering the Brazilian market in November 2022. Koo's founders proudly claimed to have built a "globally scalable product in a fraction of the time that X/Twitter did, with superior systems, algorithms, and stakeholder-first philosophies."

Financial struggles and Market challenges

Despite its initial success, Koo faced hurdles in sustaining growth and financial stability. The company had raised $65 million from investors including Tiger Global, Accel, 3one4 Capital, and others. However, the founders acknowledged that the social media business model requires substantial long-term investment to become profitable.

"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," the co-founders explained. "We needed 5 to 6 years of aggressive, long-term and patient capital to make this dream a reality."

The funding winter hit the tech industry, challenging Koo. The company scaled back its growth plans and implemented cost-cutting measures. In September 2022, Koo laid off around 40 employees, followed by another round in April 2023 that affected 30% of its workforce.

Koo's user base has declined in recent months. Reports indicate the platform's monthly active users (MAUs) dropped to about 3.1 million in April 2023, marking the third consecutive monthly decline. This is a significant fall from its peak of 9.4 million MAUs in July 2022.

The decline in user numbers coincided with a period of relative calm between the Indian government and major social media platforms. This reduced the need for alternative platforms like Koo.

Government support impact

The Indian government's initial support for Koo played a crucial role in its early success. As part of the "Atmanirbhar Bharat" (self-reliant India) initiative, officials actively promoted Koo as a homegrown alternative to foreign social media platforms.

The association brought challenges. The platform faced scrutiny over content moderation policies and had to balance free speech and compliance with local regulations. The government backing raised questions about data privacy and independence among some users.

Despite the shutdown, Koo's founders remain optimistic. They plan to evaluate making Koo's assets into a digital public good to enable social conversations in native languages worldwide.

"This is very difficult and complicated tech, and we've built it painstakingly in record time," the founders stated. "We will be happy to share some of these assets with someone with a great vision for India's foray into social media."

Lessons for Indian tech ecosystem

Koo's journey offers valuable lessons for the Indian tech ecosystem, particularly for startups aiming to build alternatives to global social media giants. The case highlights the challenges of scaling a social media platform, including the need for long-term funding, user acquisition and retention strategies, and navigating regulatory environments.

The experience underscores the importance of diversifying revenue streams early and building a sustainable business model to weather market fluctuations and changing user preferences.

Conclusion

The shutdown of Koo marks the end of a bold experiment in creating a homegrown social media platform for India. While the platform failed to achieve its goals, its journey has contributed to the ongoing dialogue about digital sovereignty, content moderation, and the role of social media in shaping public discourse.