Koo’s shutdown is a cautionary tale for founders of social media platforms: Experts

Launched as a homegrown alternative to Twitter in early 2020 and recognized by the Government of India as India’s AatmaNirbhar App, microblogging platform Koo made a low key exit last week, shutting down just four years after its launch.

Known for its succinct posts limited to 400 characters, Koo quickly became a favoured platform for users seeking to express opinions and connect with others in regional languages. Soon after its launch, Aprameya Radhakrishna, Co-Founder, Koo, had said, “Koo has Indianized the micro-blogging format by creating an immersive language experience. We understand India’s language diversity is unique and a global solution doesn’t work for our people. We are committed to being a platform that helps create and carry the Voice of India to a billion Indians.”

Koo’s user base surged, particularly after a government directive to comply with new IT rules, which mandated platforms to appoint local compliance officers and establish grievance redressal mechanisms.

However, amidst its rise, Koo faced challenges regarding content moderation and data privacy concerns.

The shutdown of Koo marks a significant development in India’s digital landscape. It raises questions about the viability of local social media alternatives in a globalized market dominated by tech giants like Twitter and Facebook. The incident highlights the complexities of balancing freedom of expression with regulatory compliance in the digital age. Moreover, it underscores the broader implications for innovation and competition in the Indian tech sector, as policymakers and entrepreneurs navigate the delicate balance between promoting indigenous platforms and ensuring a level playing field for international players.

In a Reddit post, an ex-employee of Koo revealed, “I used to be associated with the company a year back. I have seen DAU numbers getting 4X to where it was when I joined. The heart of the company was in the right place, they hired the best of talent to join their analytics division, ML team and what not. I had seen teams working on diverse interesting problems ranging from content ranking algorithm to generative AI for content creation to fraud detection, legal aspects and policy adherence to operate in Indian social media space...it’s huge. We tried getting users from rewards program, later tried using vouchers by associating with different brands to control our cash burn. All in all, social media is ruthless, you can aspire to have one of the best products, use best class technology and teams, but network effect and solving revenue model is hard to counter.”

The story of Koo’s rise and fall is emblematic of the broader challenges and opportunities faced by homegrown social media platforms in India. As Koo attempted to carve out a niche by catering to regional language speakers and complying with stringent local regulations, it encountered a host of issues that ultimately led to its shutdown. These included formidable competition from established giants like Twitter, significant hurdles in user acquisition and engagement, and a complex regulatory environment. This context sets the stage for a deeper exploration of the specific market, strategic, and regulatory challenges that Koo faced, and the insights gleaned provide a nuanced understanding of these dynamics.

From a market perspective, what were the major challenges that Koo faced in competing with established platforms like Twitter, and how did these challenges contribute to its shutdown?

According to Shivashish Tarkas, Founder, The InterMentalist, “In an industry fraught with formidable challenges, the key to success as the founder of a social media app lies in understanding and influencing the audience on a deep psychological level. Every aspect of the app’s functionality should be designed to captivate and engage users daily. Without this vision, expecting significant audience traction would be unrealistic. Koo, for instance, appeared to mimic X but lacked the innovation and depth needed to stand out. Its attempt to focus on regional appeal was merely a superficial gesture in a vast and competitive landscape.”

Nikhil Parmar, Impactful Pitch, Founder, observed, “In order to compete with Twitter, Koo had to overcome several obstacles, including having a smaller user base, a less well-known brand, and fewer resources for marketing and innovation. Even with its platform dedicated to Indian languages, Koo was unable to draw in a wide range of users. Furthermore, Twitter benefited greatly from network effects, which made it challenging for Koo to acquire a sufficient number of active users. These difficulties impeded its expansion and participation, which eventually led to its closure.”

In terms of business strategy and financial health, what were the critical missteps or shortcomings that led to Koo’s downfall, and could they have been avoided?

Shivashish Tarkas pointed out, “There was a distinct lack of business strategy focused on appealing to end users with Koo. Despite initial buzz, their marketing efforts were surprisingly passive and disconnected from fundamental marketing principles. They seemed to have relied solely on attracting influential figures to drive downloads, neglecting broader user engagement. Notably, Koo struggled to make an impact in the Southern regions, where its presence was minimal. The entertainment and media sectors were notably absent from Koo’s marketing strategies, suggesting a narrow approach. Overall, Koo’s team appeared to lack a cohesive vision for holistic development.”

Nikhil Parmar noted, “A critical analysis of Koo’s business strategy reveals shortcomings that contributed to its demise. An overreliance on expensive user acquisition campaigns led to a decline in active users, indicating a failure to cultivate organic growth.  Furthermore, the platform struggled to establish a viable revenue model, resulting in insufficient income to sustain operations.  These pitfalls could potentially have been mitigated by prioritizing organic user engagement and exploring alternative monetization strategies.”

How has the regulatory environment and the evolving landscape of social media in India influenced Koo’s operations, and what does its shutdown signal for future social media startups in the country?

Shivashish Tarkas said, “The impact of Koo on the current social media landscape is negligible. The current social media apps environment and regulations around it do not support a lot of easy growth for start-ups. The shutdown of Koo should serve as a cautionary tale for current and aspiring founders of social media platforms. Similarly, investors should re-evaluate their strategies for evaluating and promoting social media startups.”

He further added, “The founders were not able to gauge Koo’s potential as a social media platform right from the start. It lacked a visionary approach and they seemed opportunistic, capitalizing on social media trends accelerated by the onset of Covid-19. This is also an eye opener on how investors are easily convinced without having substantial plans to compete with social media giants.”

“Koo’s operations were greatly impacted by the legal landscape in India, which is characterised by strict rules pertaining to data protection and difficulties with content control. It was challenging to maintain user growth while navigating compliance. The closure of Koo indicates that in order for Indian social media firms to prosper, strict adherence to regulations, strict content standards, and competitive differentiation must be given top priority. To survive in this environment, creativity and conformity must be carefully balanced,” concluded Nikhil Parmar.