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Secret Shuts Down (techcrunch.com)
417 points by ilamont on Apr 29, 2015 | hide | past | web | favorite | 240 comments

This shutdown - and some of the comments here that indicate how nasty Secret had become before it died - is quite interesting in light of the conversation surrounding Google's Real Names Only policy.

Secret cofounders David Byttow and Chris Bader-Wechseler were both veterans of Google+. Byttow, in particular, I recall being quite well-respected as someone who got shit done, quietly and efficiently, by the rest of the G+ team. I didn't know him personally, but I had a few professional dealings with him where I found him to be a straight-shooter that was remarkably effective and helpful. When I heard of the product concept for Secret, my first thought was "Woah, somebody's finally decided to take the other side of the stupid Real Names policy and build a social network that's completely anonymous."

Apparently that doesn't work either, and when you do that, people hate you just as much.

My take-away from this is that social software is remarkably hard, and that whatever you do, people will hate you. The social sites that survive - like Reddit, Flickr, and Facebook - are those that very carefully balance everyone's competing desires, making just enough changes to keep everyone slightly disgruntled but not enough to leave the site. The ones that die - like Secret, G+, LiveJournal - are the ones that either do nothing to moderate or that introduce heavy-handed blanket policies. (4chan, as always, remains inexplicable; somehow it is still going strong despite being a cesspool. Maybe that's the whole point of it, though, to be the Internet's honey pot of bad behavior.)

4chan isn't a cesspool though, that's just an image they project to push away people who would respond to such pushing (approximately, the olds).

(There are certainly parts of it that are risky clicks though)

I think 4chan survives thanks to its smaller communities. The big boards tend to turn into cesspool once a critical mass is reached (/b/ of course but also /v/ and /pol/, maybe others I'm less familiar with). Even in big boards if you're lucky it's sometimes possible to find an interesting thread if the subject is not too controversial. I'll still take that over reddit though, on 4chan people feel more genuine, for better or worse.

/b/, /pol/, arguably /v/ are all containment boards. They've never been good, they'll never be good, etc.

The reason 4chan has survived has been that it promotes anonymity and hence genuine expression. After dealing with it, for a while, you get to kind of know different types of people. You can go to a containment board and find people that are genuinely, for example, homophobic and antisemetic with complete seriousness. They compete for space with people that are just trolling, and both compete with some genuinely level-headed people. It's fascinating to watch.

Meanwhile, in other boards, you'll find people snarking over guns (/k/), bicycles (/n/), anime (/a/), otaku and general Hikikomori behavior (/jp/), making things (/diy/), and on and on.

Because everything is anonymous and the boards move so fast, there's no advantage to the sorts of politics and forking you see in Reddit or whatever--instead, you just develop a sort of hang-out culture and occasionally interact with invaders. It's fun.

By containment board do you mean like a theme that serves as a sink for those types of users so they don't bleed into the more general topics?


Unlike other more oppressive moderation schemes (cough reddit hackernews cough), 4chan just accepts as cost of doing business that people are going to want to be shitheads.

So, you have boards specifically for people wanting to be shitheads. Over time, that becomes board culture, and often raises to a level of self-parody that they become easy to spot when they leak. Imagine, if you will, an island whose sole form of humor is hyperbolically racist, sexist, classist, or materialist. If you can contort yourself into that headspace and engage the art on its own terms, it is a never-ending source of creativity and amusement.

The best part is, if it shows up somewhere else, you can just tell them to "go back to <whatever>", and they don't get a persecution complex about it, because they're not being censored.

Usually when people say "4chan" I assume they mean /b/.

/v/, /jp/, /pol/, and so many other boards are extremely toxic in behavior as well. There's some interesting stuff, but it's behind layers of "2edgy4u" behavior of people trying to out-insult each other.

I'd take goatse spam, arguments about hitler being a decent enough chap, and FYAD flames in that sort of environment over twitter where the threats seem real, because most of those sending don't seem to be in on the fact it is all a big joke.

Maybe it's just me - but I think the irreverent self-aware toxicity has it's advantages.

I agree with this sentiment.

4chan's /b/ is seen as "the cesspool" and nobody tries to make it better because nobody wants it to be better. It just needs to be that place where the EMT that spent his day dealing with life and death can relieve his stress and let go of what's plaguing his mind with "lol, tits or gtfo"[1].

Because in the end, it's all a big joke.

1: Can't find back the exact screenshot were a /b/ user was saying this, sorry.

That's what keeps them interesting, honestly. I see the edginess as a kind of intelligence test: only people who are smart enough to ignore offensive content need apply.

I would phrase it as, "the default/most-well-known subforums of any forum will be garbage once the site reaches critical mass, being diluted by new members too quickly to keep their character. A proliferation of smaller subforums with their own effective communities will displace the sense that the site has any worthwhile/coherent community taken as a whole." Applies equally to 4chan and Reddit.

One name for this is Eternal September: http://en.wikipedia.org/wiki/Eternal_September

Not entirely true.

Some of the very large subreddits such as /games and /askscience have actually retained very high quality. They just require very strict rules and heavy moderation.

Just compare the frontpage of http://reddit.com/r/gaming with http://reddit.com/r/games — granted one is about twice as big as the other in terms of active users, but /gaming has been full of low-quality submissions since before it became a default subreddit.

It just comes down to having proper rules and enforcing them.

Now, reddit and 4chan are very different in the regard of perceived quality. If you heavily moderate a subreddit the low-quality submissions will for the most part only be viewed by those that browse the queue of new submissions. This isn't really true with 4chan since the low-quality submissions that are buried will still be viewed by everyone (although this kind of depends on if you've configured the order of submissions).

As an interesting aside, you can actually significantly impact what submissions get buried in a subreddit with very few votes since there's not a lot of people that browse the new-queue.

It actually is. It depends on that community you are talking about, but after several years of on and off I completely disagree.

Moderation on 4chan and /b/ has increased over the last year. Mostly to prevent the posting of peoples personal information. But the posting of shock images has also decreased. I don't know if they are being removed as well.

Yes, so-called "Social Justice Warriors" took over and made once uncensored board into heavily censored tumbr.

Mootles himself said that the reason 4chan works is because people make terrible asses of themselves every once in a while, and despite that can still contribute to society and culture. Anonimity ensures that even if you do fuck up, you still arn't ostracized, the benefit being that you will take risks and maybe make something amazing.

The idea of individually singling someone out to make their lives miserable, for something stupid they've done, seems anathema to 4chan's culture. Or at least what makes 4chan's culture work. I see no problem with 4chan's mods removing dox.

You're an idiot, so are we all, but people don't forgive as easily as they should.

So have an upvote, make another post, and try again! Stick around Giorgi.

if preventing doxxing is your idea of social justice i have some news that will confuse you

One visit to /pol/ will show you how incorrect you are about increased moderation and lack of free posting.

   > My take-away from this is that social software is
   > remarkably hard, ...

   > and that whatever you do, people will hate you.
Disagree. I think it is remarkably difficult to create a functional community, and it is impossible to do that if you don't understand how communities work.

In particular, successful communities often have places where similar members can congregate and effectively shun people who don't fit in. Call it a clique, call it a subreddit, but really its about finding a mental space to be.

One of the best posts I've read about internet communities discusses this, long but worthwhile:


The relevant point is the dynamic balance between "plazas" (highly accessible areas to anyone) and "warrens" (areas accessible only to an accultured in-group). "Evaporative cooling" is the phenomenon of the best contributing members "boiling off" and leaving due to frustration from excessive noise, flame wars, etc. From the post:

"Warrens are like rabbit warrens: low global visibility, highly personalized corners where small groups can aggregate/self-segregate. Plazas are like grand public town squares with lots of global visibility. Warrens are maze-like: it is hard to break out of your current corner, and it is easy to get lost. You couldn’t get lost in a plaza even if you wanted to.


'Warrenizing' a site undeniably slows evaporative cooling, by allowing groups to self-segregate. On Sulekha, we had a warren of individual topic boards, and a firehose plaza that consolidated the entire discussion stream at the landing page. When flame wars got too hot, we used to simply turn the plaza stream off, so people were forced to go directly to individual corners. Things would immediately get quieter. Groups would get sequestered, and therefore less likely to leave because of unpleasant activity elsewhere that they didn’t like."

What do you mean by "we" & sulekha. I used to be a regular almost a decade back. I used to make decent comments but used to put that one snide remark. Over a period I realised that distracted from the point I was making and no longer do that.

Over a period of time I learnt to ignore trolls and baits

I think that being able to shard the site into multiple subcommunities is a necessary but insufficient condition. Look, for example, at r/ShitRedditSays. The best you can hope for (above a community of a couple hundred) is people who will grudgingly use what you produce while talking about how useless it is.

I wonder if anybody has made a 'choose your own community' site. You choose how many people you're given access to (say, 100, 10K, 100K, 1M+) and the only information you get is from those who are nearest to you in location and interests (based on an adjustable scoring algorithm) and anybody you've previously conversed with.

Smaller communities could make for more specialized content, and everybody living on the edge of a bubble means theres plenty of opportunity for valuing middleman-style culture sharing (AKA reposts.)

Subreddits, right?

That's a little different...

Reading your post a few times, I don't really see the difference. Your last sentence perfectly summarizes small subreddits and cross-posts.

Reddit doesn't prevent more people from joining your sub. If you want a sub of 10K users, and 10M people join, too bad. Secondly, it doesn't filter users based on location. If I wanted to talk to the nearest 100 people, too bad. I have to make a new sub, find those people, and convince them to join.

So really, all of the two things that I suggested are things that reddit doesn't do.

It's very hard to bootstrap something that doesn't just let people add all their friends (from anywhere in the world).

A clique, a subreddit, a treehouse, a coffeehouse, a salon, a third place, a safe space, inside the magic circle...

I'm not so sure it's wise to call G+ a "dead" social network. According to recent research by Pew, it's more popular than Twitter and just as popular as LinkedIn.


Depends how they define "use" - as this article[1] points out "Technically, tons of people use Google+, since logging into it gives you access to Gmail, Google Drive, and all of Google's other apps."

If the numbers there are right and only 4-6 million people are using it as a social network it isn't very surprising that Google would be "giving up on pitching Google+ as a social network"

[1] http://www.businessinsider.com/what-happened-to-google-plus-...

It's currently impossible to create a Youtube playlist without a G+ profile.

Every time I want to create a new playlist, I create a new G+ profile, then delete it immediately afterwards. It is tedious. I'm sure many other people, when faced with roadblocks like these, create a do-nothing profile but don't bother deleting afterwards.

Even better, Google is deprecating the OpenId login to push Google+; the new OAuth login _requires_ you to have a Google+ account. So if you use your Gmail for say StackExchange, get ready for your Google+ page!

I don't think this is true. Google is pushing Google+ login, but you can use that without a Google+ account, and the normal OAuth2 login is still around and not being depreciated.

> I'm sure many other people, when faced with roadblocks like these, create a do-nothing profile but don't bother deleting afterwards.

Or don't use playlists and find other websites.

It's pretty hard to find as much content as Youtube elsewhere, from experience all the youtube-wannabe websites have tremendously less content. Or do you have a link?

I made this a few years ago:


Try this for youtube playlists: http://instadj.com

LinkedIn and Google+ have all the appeal of filling out tax forms.

Seems like a big success to me. The founders each took 3 million cash off the table on investment and now are closing up the company. Corporations are just a vehicle to make money after all, they got their pay day and ran.

There are almost certainly rules/stipulations around the money that was taken off the table by the founders in their funding round. It most certainly was tied to vested equity, at an absolute minimum, rather than granted as something such as a one-time bonus with no strings attached.

I would be surprised if the founders get to contractually retain the entire $3MM taken off the table in that funding round. It is possible that this is the case (and so maybe not so surprising) but given the often unique terms in startup funding, I would be surprised if this were the case here.

Question is, will any VC want to fund them again in the future?

doesn't matter, had sex

A lot of VCs funded Color, so I don't see why

The reason 4chan works is that 4chan itself is very like-minded. Secret attracted too broad an audience and scared off the quality content creators as bad content started rising. Divergence of 'like-mindedness' among different social groups was just too large for one feed.

I remember the threads on Vic Gundotra on Secret. And yes I agree that the decision to use real names or be anonymous in general should be left to the poster.

The nastiness was the distinctive feature. Once they killed that it marked the beginning of the end.

Here we go with the long-dismissed "Google+ Is Dead!" meme again.

Yeah, except 4chan is not what it used to be, main user base abandoned the ship long ago.

well, I don't think you can say that's because of the caustic nature of the site or because of how it's now moderated more strictly

...or maybe the members grew up?

4Chan is not going strong, in fact a large majority of their core users have migrated to 8Chan because of Moot's brainwashing by SJW.

I hate that I have this reaction; when I read things like this, I can't help but feel that you're a 14 year old who accidentally found your way into the adult Internet. Welcome! Please try to not be a jerk here. We aren't 4chan.

Your comment is superficially more polite than the typical 4chan post - but actually it's even less constructive (and perpetuates the horrible stereotyping of younger people). There's no way to respond - nothing to refute, not even anything helpful if you do agree.

8chan is still quite a niche forum when compared to the sheer size of 4chan. There are a lot of *chan forums out there with varying popularities. A handy resource for comparing these is https://nnmm.nl/chanstat/. A great example is comparing the most popular board of both forums /g/ (/tech/), /pol/, /v/ and /b/. I'm quite familiar with the drama that was happening half a year ago during GG and the /pol/ purge. Blaming such events on SJWs instead of the internal conflicts that have been going on on boards/across boards for ages is narrow minded.

That was certainly a really bad move—Obviously people were very pissed off.

The kind of people who deserve to be pissed off.

People like freedom of speech, actually.

Your "Freedom of speech" means you're free from Government persecution for speaking. That's significantly different to moderation on 4chan.

This has been a fascinating story to watch unfold (and experience as a user.)

When Secret came out, the addiction bug bit me hard too -- it was _extremely_ compelling. I posted. My friends posted. Everyone was checking Secret obsessively. People were "communicating" with their exes (or so they thought), people were guessing who was posting what. It was fun. It was interesting. It pulled some emotional heartstrings (I had a few interactions with "friends" who I was pretty certain I would never have spoken with in real life - i.e. bad breakups, etc.)

Then it took a nasty turn. There was gossip, there were attacks. They didn't get too bad, but the tone changed.

Then they released the Android app. More users signed up. It started to take on a high school feeling ("omg my crush winked at me"). It got more popular.

Then, at least in SF, it started being almost entirely about gay sexual fantasies. Friends in my circle started using it less, so it got less interesting to me. Eventually I stopped using it when nobody I knew was posting.

After that, I stopped following. They did some massive redesign which seemed terrible, and I didn't really pay attention after that.

In the end, it was a niche fad that had particular appeal if you were a tech person in SF. All the gossip - as taboo as it was - was interesting and compelling (I admit it!). It was a fun, exciting, interesting fad, but it succumbed to the sort of thing fads usually succumb to -- time.

The problem with these sorts of things - flash in the pan community-specific fads - is that they're _incredibly_ hard to sustain, and even harder to monetize as a business. I certainly understand the instinct of VCs to throw money at a hot app experiencing meteoric growth (and I doubly understand the response of the founders to take both the investment and the secondary $), but it was a longshot to start with.

Frankly, I admire them for giving it a shot, recognizing the reality, and returning the leftover capital. Well and rationally played all around, me thinks.

"When Secret came out, the addiction bug bit me hard too -- it was _extremely_ compelling....Then it took a nasty turn. There was gossip, there were attacks. They didn't get too bad, but the tone changed."

And all of that, from what I recall, in the course of maybe three months. It wasn't hard to predict the decline -- the Greater Internet Fuckwad Theory has been around since what, 2004?

Maybe the investors who dump money into this kind of flash-in-the-pan stuff ought to wait a few minutes before signing the term sheets. But, oh yeah...because we're in a white-hot investment market, the Fear of Missing Out (aka Fear of the Greater Fool) doesn't let you stop to think.

It seems to me that VC's take heat for investing too early, too late, too much and too little. Being too conservative or too risky. They're an easy punching bag.

I don't ordinarily care what VC's do with their money (i.e. mostly lose it), but it's disingenuous to suggest that there aren't clear trends: it's very difficult to raise a series A, but if you're the hype-driven flavor-of-the-moment, you can close a round with little to no diligence, few metrics and none of the proof traditionally required of a series A investment. We're still seeing money get shoved at companies who had a moment in the sun on ProductHunt or Reddit, with zero validation of the underlying business prospects (or even much in the way of critical thinking).

So yeah, VC's do take heat for investing too early, too late, too much and too little. It isn't a contradiction -- it's what people do when they act as a herd.

Because the best validation is people using your product. Or technically, the best validation is people paying for your product, but if they're doing that in amounts great enough for a VC to notice then you don't need to raise VC.

The herd behavior comes from everyone having more-or-less the same metrics for what constitutes success: people using your product. If that metric isn't evident, you fall back on the fundraising strategy for people who don't have traction: try lots of VCs and hope that one buys into your vision enough to invest. If the next better metric - lots of revenue - is evident, then it's too late and chances are that someone else has already invested, or they don't need investment.

Ehhh. Traction is a necessary, but insufficient condition for getting a series A. There's a "hotness" component here that's contributing to the overreaction.

You can't explain things like (for example) Meerkat raising a big round and cratering the very next week without considering the importance of hype. Meerkat and Color and Secret are walking out the door with big checks while lots of other entrepreneurs with great metrics are waiting for their fifteenth meeting...because they're not in the tech gossip rags.

Say what they will in public, I'll bet you that Meerkat's investors are wishing they'd sat on that term sheet for a couple of days.

> Then, at least in SF, it started being almost entirely about gay sexual fantasies. Friends in my circle started using it less, so it got less interesting to me. Eventually I stopped using it when nobody I knew was posting.

This happened in Boston as well. It was really odd how rapidly it changed from a mix of different types of posts to nearly all gay sex posts.

I wonder if that won't flow over to Yik Yak now that Secret has shut down?

Secret didn't have a mechanism to remove offensive posts that was as effective as Yik Yak's is.

Yaks can be raunch as all get out, but there has to be something for the average person to relate to. If you follow it closely, you'll see there are many posts made while the author has lost their mind with hormones, but they're voted off in about 120 seconds.

Yik Yak's mechanism for removing "offensive" posts is exactly why I stopped using it. The amount of mundane posts of mine that were deleted was incredible. Too many people take offense to so many things.

If the community as a whole doesn't like the content you post, could the problem perhaps instead be you rather than them?

It sounds like the moderation was working for the good of the community, even if it meant some individuals (such as yourself) suffered for it.

My office had to have a special meeting about personal and sexual harassment on this app (some people decided to discuss colleagues on secret, and not their professional capacities). It started with fun prank, but ended up being really weird and awkward, and people were really hurt by the abuse.

Needless to say, I wasn't a fan of the app afterwards.

Seems like they should have spent a lot of energy on making sure feeds were as compelling as possible for each user.

I think there's definitely room for this type of service and the original Secret was fairly well-executed.

Seems like a good argument for channels? Sounds like you would have liked to have stayed connected to the latest happenings for the tech scene in SF.

"Then they released the Android app. More users signed up. It started to take on a high school feeling"

when you mention the injection of android users, aren't you really talking about inner city high school kids using the app on boostmobile and metropcs phones?

I was also a user, and experienced many of these same things.

Makes you wonder if they didn't spread their net too wide too quickly. Perhaps "Gay Secret for the SF area" might have taken off -- and given the team the chance to tweak/nail the experience.

It seems kind of crazy to me that people talk about startups and try to apply completely the same model for everything to:

1) A social app like this, which is essentially hype-based and self reinforcing. Success seems entirely down to virality and adoption, followed by monetization.

2) Some very vertical market focused SAAS offering which can be developed with minimal outside capital, own a niche, and where capital can then be applied to expand to other verticals, accelerate the sales process, etc. (Say, a scheduling application for vets)

3) A capital intensive project in a well understood field (IAAS, hardware, lab stuff, etc.)

4) Entirely new technology deployment (not discovery, which tends to be hugeco or lab, but first commercialization)

Clearly there are some commonalities, but there are a lot of areas like employee vesting periods, how you recruit, etc. which probably should be different in these different kinds of companies, but tend to be the same.

Spot on. A lot of what's very challenging for today's web startups, like hiring, is easy for startups in cleantech, since there's so few funded startups. Conversely, it feels an order of magnitude more challenging to raise the money in clean tech...

For the curious, pulled their deal history from PitchBook:

Secret raised their B last July at a post valuation just over 130M (http://i.imgur.com/jNXw5PZ.png). They had some major investors backing them up, and then the hype train just... stopped.

I remember so many people being so high on it when it launched, with several friends all raving about how fun/addicting it was, then just poof it disappeared from conversation.

Hearing that the founders got some cash off the table (article from last summer - http://www.businessinsider.com/secret-founders-pocket-6-mill...). While I always thought that seems like a good thing, I can't help but let my mind wander a bit as I know if I were given a nice chunk of change like that so early, it might be kind of hard to keep focus.


Here was the intended use of the $25M: "The funding will be used to implement two new features, a Facebook login and the ability to follow posts on a certain topic". This is what is wrong with Silicon Valley today. An afternoon project for a single developer gets $25M from investors. Please, someone give me just $10M....I've already implemented Facebook login for my apps.

That's hilarious! In Web 1.0, people raised $7 million to buy a domain name. Needing $12.5 million to implement a Facebook login ($25/2 projects) is even more ridiculous.

Box paid 7 figures for the Box.com domain name, so I wouldn't say that raising money to buy domains is dead yet.

Box bought box.com roughly 6 years after they launched, they were already wildly successful (as box.net).

Has box had a profitable quarter yet?

has Amazon?

Amazon's first profitable quarter was in 2001: http://news.cnet.com/2100-1017-819688.html

Huh. I implemented iOS and Android Facebook login for https://recent.io/ in a few days last month. (The login code itself wasn't that time-consuming but UX, debugging, etc. took longer.)

I am beyond certain that investors did not fork over $25M for the two features outlined. There's simply no way that's all they were spending the money for.

Yep. They probably had to buy several cases of coconut water, made some very expensive visits to the Apple store, and the founders maybe bought a Mercedes or two.

Oh yea? I'll do it for $9M.

I'm certain that if you can build a product that generates a huge buzz and gets millions of people to sign up that you will have absolutely no trouble raising that kind of money.

So go for it!

Ahh, but we're not talking about building the whole product and generating buzz, etc. We're talking about the stated purpose for raising $25M: "The funding will be used to implement two new features, a Facebook login and the ability to follow posts on a certain topic".


For TWO features.

Hell, ignore my previous offer. I'd have given them a 92% discount and done that for a cool $2MM.

Pace yourself. Be a little less eager to drop your price when you bargain. Try $24.5M first, then $24M. It's still a discount compared to the competitors.

You're already asking for a price so low you might end up barely scraping $100,000 an hour.

That's not the actual purpose for the money.

The purpose of the money was to grow the company. For a business < 1 year old it's impossible to predict what they'll need, so they just fill in the blank with some random sentence that no one cares about.

Excellent business practice!

It is actually.

I am not familiar with Pitchbook. Where does that information come from?

or maybe the source is wrong, or it was a throwaway line about what's next, or...

it's very easy to believe the worst of others. but it's beneath you.

I remember so many people being so high on it when it launched, with several friends all raving about how fun/addicting it was, then just poof it disappeared from conversation.

Pure speculation, but I think trolls/frauds took it over. I say this as a Secret troll myself. I knew the odds of the data (linked to my FB account) becoming public was too high to post real secrets, so I used to just experiment with what got people liking or leaving comments instead. Which was amusing.. until I could tell a lot of people had started doing the same. So I stopped using it.

Did it always have the FB login? Could that have been what killed it?

I could be wrong, but when I signed up (not early but around the time it first hit the headlines) I thought it was the only way to sign up, or at least the only useful way (since you needed friends and friends-of-friends to see secrets from).

Investors (and the team) were looking at the wrong numbers. In apps, it's basically all down to having meteoric growth week over week. It can't be based on spikes as this was.

Taking money off the table in a B makes sense for the founders, and I can't blame them for leveraging their situation.

Ultimately this falls on the investors for biting on hype, and not having a deeper understanding of the product (and it's potential)or the founders (and their potential).

edited for clarity.

Totally makes sense - but I also completely get why the investors would bite on hype - missing the next billion dollar company is way worse than incorrectly picking a few duds.

Exactly right, this is a very important message here that should be taken away by future (and current) entrepreneurs.

I don't know, at a 130m valuation, a 100x exit was no longer possible, and even a 10x didn't even seem that likely.

130m x 100 is only 1/4th of uber, not really impossible anymore.

Uber hasn't exited, so that argument has no basis. Can maybe compare to whatsapp... and that's probably what investors did.

A $35m dud, though. That's not small fry.

True, but there are 27 investors on that table, not too bad spread out

Well they are returning some capital, so perhaps the damage isn't quite that bad.

It's high risk for the investors. For every Uber, there are many that don't pan out. It's the nature of the game, and why they make lots of investments.

Noobie question: what happens with the off the table cash?

I'm guessing it remains firmly off the table.

Crunchbase says they have 11-25 employees... how did they burn through all of that money? Is it possible they are pivoting or returning money to investors?

From the article it doesn't sound like they ran out of money, sounds like the growth has stalled and key talent has left. I bet the money goes back to investors, it doesn't sound like the team is still in place to pivot.

They haven't. The article says they're returning the money.

Very likely returning money to investors.

Here's the official Medium post by the cofounder, in which there is confirmation that they are returning the money to investors: https://medium.com/secret-den/sunset-bc18450478d5

The post also includes the phrase "incredible journey" verbatim.

Was that a reference to this tumblr: http://ourincrediblejourney.tumblr.com/ Pretty appropriate.

Technically, the curator of that Tumblr account created it to criticize acquihires, not shutdowns in general. From the "What is an incredible journey?" page:

> Companies go broke all the time. It’s unfortunate and it may mean a service you love will close. But some things just don’t work out. [...] This is what is galling. A company that can afford to pay millions for some new staff but not for what those staff built. The people who used the service, and invested their belief and time in uploading photos, or forming friendships, or logging data, are left to find new virtual homes while their former hosts enjoy a nice (if possibly delayed) payday.

-- http://ourincrediblejourney.tumblr.com/post/89180616013/what...

Although admittedly, from an end-user's perspective, the effects are the same no matter the reason for the shutdown.

I thought secret was a really, really cool idea. I downloaded the app and played with it for a few days. After the hype died down, the app was almost 100% about sexual fantasies, coming out of the closet, and having been beaten/molested as a child.

I can't be sure, but it seemed to me that the "upvote/like" mechanism boosting posts to the top (with no validity required) turned Secret into an enormous, "Who can say the most absurd clickbait thing" contest. It got tiring, and I deleted the app.

Having talked with a few other people about Secret, they said the same thing.

This was exactly my experience, even before the hype died down. 99% of the posts were from my gay friends (and friends of friends) talking about some sexual fantasy or sexual encounter.

It was simply not compelling content, so about two weeks in I deleted it.

I wonder if there was something in the marketing or the initial group of people that created some zeitgeist that eventually killed the idea? I'd be interested to know if they actively made some effort to try and get out of that rut.

I would've never understood the appeal of these anonymous apps over something like Reddit (in which you can be as anonymous as you'd like) if I hadn't had a job on campus, where YikYak is well-frequented, and a far better source of breaking trivial news (i.e. what is all that yelling outside about?) than anything else...using YikYak periodically has made me realize again how easy it is to underestimate the appeal of less friction...including the friction of having to deal with users and their user histories. On the other hand, it's a shitshow when some topic like Greeks vs. non-Greeks or Middle East politics comes up...and having no way to filter the noise, either by user or by topic, ends up killing the enjoyment of the app. Yikyak is interesting because of its popularity on campus...but anywhere else, and it's not something I'm compelled to check at all. I imagine the same thing happened with Secret after it stopped being the gossip platform for Silicon Valley people

> I would've never understood the appeal of these anonymous apps over something like Reddit

Recently, we did some analysis (sensitivity, type, potential audience and linguistic characterists) on the content posted on anonymous social media like Whisper [0]. Most of the posts were about Confessions, Relationships, Meetup and QnA/Advice.

[0] http://socialnetworks.mpi-sws.org/papers/anonymity_shades.pd...

I'm not sure I understood your point. You have all of this on reddit.

In Reddit, you are pseudonymous - users do convert pseudonymity to anonymity by the usage of throwaway accounts. In case of anonymous media apps, the concept of anonymity is embedded. For example, on reddit - there can be ONLY one "Barack_Obama" on Whisper there could be thousands of them because there is no unique username. In addition, you could view profile of a pseudo-identity on Reddit. On anonymous social media, there is no profile information.

The key difference between anonymous vs non-anonymous (or pseudonymous) media is lack of unique identities and/or profile information.

YikYak added muting by user just recently.

Yeah, it's an option when you "report" something.

Although assuming muted users continue to post controversial things, in the long run it may just lead to less reporting.

I've never been more addicted to an app than when Secret first came out. It was all the rage in SF. I had to force myself to delete it after a few weeks in order to get back to productivity. I completely understand the hype. Personally, I feel this is a story about poor execution. They changed the nature of the app so significantly over time that it lost its appeal and never expanded successfully beyond the bay area. Shame.....it was so much fun and they are such a talented team.

> never expanded successfully beyond the bay area

This seems to be something of a meme.

The Bay Area is a truly unique and bizarre place. People are incredibly busy and tech-savvy, and they're willing to spend way more on minor conveniences than people elsewhere.

It seems like lots of companies raise on their explosive growth in and around the SV community. It may extend to people with similar demographics in other cities, but it's still a niche.

I'm also thinking of all those gourmet snack-delivery companies, laundry-delivery, etc. Those might make a few million in revenue some day, but they're never going to have high margins or universal appeal.

It went extremely viral in Israel about a year ago.

At first with the start-up community that's very connected to SF used it for internal gossip and anonymous whining and dissing.

Then it expanded naturally to young creative types (developers, designers, bloggers, journalists, etc) who are connected to the start-up scene, and became big in the gay community in Tel-Aviv, that highly overlaps both groups.

And then the mainstream media started raving about it, and it exploded with the masses and especially teens. At this point it just became a cesspool of online bullying for teens, and I lost interest in following its path. There was even a proposed law banning it in Israel or something (http://pando.com/2014/08/28/israel-becomes-latest-country-to...). But seeing this expansion graph over a period of 2-3 weeks last summer was fascinating.

From my very limited perspective from outside Silicon Valley, Secret looked almost like an exercise in Silly Valley self-parody - like an elaborate joke that went too far. Did it implode? Yeah, sure. Did it ever make sense in the first place? Not really.

pg says that great ideas often look like bad ideas. But I think it's also true that bad ideas often look like great ideas.

And that it's often hard to tell that a great idea has been poorly executed until it's too late.

Completely agreed. Secret was basically a manifestation of Poe's Law[0].

[0] https://en.wikipedia.org/wiki/Poe's_law

Can we not link to TC please and use https://medium.com/secret-den/sunset-bc18450478d5 the official link?

I've used Secret several times a week since they launched. Although the most recent redesign was panned from every corner, I found it to be the best anonymous messaging UI, by far. The friendly branding and overall feel of the design put it way ahead of its competitors, IMO. I discovered that their branding was actually outsourced to these guys: https://dribbble.com/shots/1854215-The-Secret-s-Out

I would love to see their series A and B pitch decks -- how were they able to convince investors to hand over so much cash with no serious monetization strategy and nothing more than a temporary download spike? Add that to the fact that they were able to take 6m off the table. I can't see any rational investor thinking Secret for Business was actually going to bring in revenue? Props to Mr Byttow for raising the money, building out a great product, and returning the capital when he ran out of options... Can't wait to read the post-mortem.

I hit a speedbump pretty fast when they wanted me to give up my address book. Yik Yak never asked for that. Yik Yak is still on my phone. Both are kind of crappy ideas, but if there was a clear winner it was the people that just let me use the damn app.

"Secret will hand its remaining cash back to investors"

Minus the $6M the founders took off the table?

If they keep it.. if ever there were a case for blacklisting founders, this is it.

It is definitely NOT cool to pull a move like that. You want to cash out early a little because you've been boostrapping, ok, but if you then bail on the company and shut it down within a year, then you start to look like a fraud who knew the company was in trouble and took advantage of investors.

1. What do you mean "if they take it..."? It is their money. They gave away personal equity that was at the time worth $6M for the cash.

2. It is ridiculous to assume they pulled any move. Startups are a high risk gamble and the VCs who put money in them know it better than anyone else does. So they didn't pull a move on anyone.

3. Let's say a company raises $1M on a $3M valuation. Then in one year the valuation goes up to $300M. Would you be calling for blacklisting of those investors? Because by your logic, they should know the company was going to be so successful and should have given the founders a better deal.

I agree that there isn't necessarily anything unethical about this. The investors knew what they were doing.

However, founders who would pocket $6M from a not-even-close-to-profitable company are probably not good founders, or they don't believe in the company. Either way, their behavior doesn't inspire confidence.

I think that you are totally wrong about these founders in particular and what taking money off of the table revels about founders generally.

Most founders are extremely protective of their startup. It's their baby, and their livelihood. They'll do anything to keep it alive. Most "poor"(<$5M in the bank) would prefer a 'safe' acquisition to gambling on being a world changer. A good accusation can change a persons life forever $10M verses $100M? Who cares? Either way it's a lifetime worth of fuck-you-money. But investors what entrepreneurs to "go big." So if an investor finds a company and team that they think has a chance of making it they will give the founders fuck-you-money. It says, "ok, your safe, nothing can hurt you. Now take the chance of building a company that can change the world!"

When you see a founder take a big chunk of cash from an early round, you shouldn't think, "they don't believe in what they're doing." You should think, "These investors (who know these founders a lot better then I do) think that they are so awesome, and have such a high chance of doing something transformative, they are basically giving them enough money that they will never have to worry about money again."

Well, maybe getting an early payout caused them to lose the hustle. They turned the engine off, handed the keys back to the investors and walked. It would have been harder to shut down the company if they saw 0 upside, and all their sweat equity evaporated.

You seem to suggest that shutting the company down was definitively a worse outcome for investors vs. keeping it going. It isn't that black and white. For example, if they kept the company going and spent the remaining millions and still failed(most common outcome), it is a worse outcome than shutting it down now and returning the millions.

To clarify, the outcome of any company is unknowable, as is the future of everything. When you take a look at the guys from airbnb trying to make rent selling cereal and renting out an air mattress, that's the hustle. I am just suggesting that, hypothtically, if these guys were that hungry they would do anything to save the company. I saw Byttow's interview with Kevin Rose, he seemed passionate and intelligent, I don't want to discont their work. I just think that there are some people that won't (or financially can't) quit until the repo guys carry out their office. The people with that drive have a high correlation with success.

They also have a high correlation with failure, burn-out and destroyed lives.

I have no doubt that there are people who are demotivated by fuck-you-money in the bank. I also have no doubt that there are people who have their ambition liberated by it. Hopefully a good investor can tell the difference before they write the check.

You realize companies like Secret more than likely had acquisition offers that could have been north of $6M? It is fairly common to turn down a larger acquisition offer for raising a funding round that lets you take some cash off the table. In that case, if anything, the founders may have believed a bit too much in their company(by opting to cash out only partially instead of selling outrightly.)

You're conflating valuation changes with cashing out. There's not problem, ethically, if a valuation swings rapidly either way. But cashing out ahead of a massive failure is a totally different move.

That sort of thing in the public markets would prompt an SEC investigation for insider trading (despite it being "their money"). In the startup world it comes down to, these are not folks investors should be trusting.

In the startup world it comes down to, these are not folks investors should be trusting.

Or "trust these guys: if they fail, they won't bullshit you and just give you the money they have remaining back."

It's all about perspective. Luckily, most investors don't think like you. Ones that do don't survive that long in the business.

You mean, except for the $6M they kept for themselves.

I'm the sort of founder that thinks it's my duty to return value to shareholders. I should make money when my investors make money. I would argue that is the only perspective that survives the long term in business. Riding hype waves to enrich one's self without producing real product, that's not sustainable.

I know we're all founders here and would love to get the kind of deal the Secret guys negotiated (or Groupon, etc.). But it's not healthy for our industry. Basically the arguments in support of these guys is, well the investors knew what they were getting into. But that could be said for any scammy move by a founder. If they're trying to "do the right thing" they should return all the money to investors, minus a reasonable salary.

I'm the sort of founder that thinks it's my duty to return value to shareholders.

You can be a founder that thinks it is your duty to return value to shareholders and still take money off the table. In fact, there are situations where not taking money off the table hurts your shareholders.

Example: you're a poor founder with $400K in loans and 0 in saving, you're running a startup with good traction. You get a $20M acquisition offer and you accept it thinking it lets you clear debt and not be super poor anymore. Problem? Your investors barely get their money back so an exit you consider successful is not that successful of an exit for your investors.

Now imagine the investors let you take $1M off the table to clear debt and get a little comfortable. Now when the $20M offer comes in, it is easy for you to turn it down because you aren't in debt and you have a decent life. As a result, you end up building a $500M company. Your investors come out ahead because the equity they got for $1M cash you took off the table made them $10M, not to mention it gave you the mindset to turn down the $20M acquisition offer.

For many funds, they would rather you fail trying to make a company that is valued at $500M than be successful in building a company that is only worth $20M. Letting founders take cash off the table can help founders think as big as their investors do about the max potential of the business.

There's a difference between "not being super poor anymore" and taking a $6 million payday. Can you name a company where this hasn't resulted in disaster?

As Mark Suster put it, "Not FU money, but 'feed the family' money." What these guys got was FU money.

Sorry, but $3M for a founder is not FU money. You can use it to buy a half-decent home in the bay area and a nice dinner...and well, that's it.

But this isn't a publicly traded market, in fact it's just the opposite.

And the definition of "money off the table" is "keep it if things head south," so it's pretty hard to begrudge them for obeying the terms of the deal.

Willing buyer, willing seller.

The investors got exactly the behavior they wanted. They let (encouraged? obliged?) the founders to take money off the table so that they would double down on a high-risk/high-reward go-big-or-go-bust strategy. The Founders did that, and the dice broke against them. They absolutely should not give the money back, and no one should give them a hard time about keeping it.

> If they keep it.. if ever there were a case for blacklisting founders, this is it.

Hell no to this horrific and toxic idea that we should blacklist anybody who sells equity and then fails.

Can you please identify yourself, so we can all be well-informed that if we go into business with you, we're going into business with somebody who believes in the public shaming and blacklisting of those who take chances and fail?

You're not cool dude. Not cool at all.

And I say that as somebody who always thought secret was disgusting and value-destroying.

Taking a chance and failing is one thing. But $6m is an absurd amount of money. That's never-work-again money (I'm not sure why they'd even mind being blacklisted). People in my neighbourhood would literally kill for less (and in a few tragic cases did).

Are you serious? After taxes that's maybe 1.8mm each. That's great, but certainly not never-work-again, especially in SF where the median one bedroom goes for 3300/month.

When doing FU calculations, you have to figure out how much you can earn from investing it, then factor in cost of living increases over the next 40 years.

Put it another way, if they invest and get 4% annually that's like earning a salary of 72k. Good luck living on that in SF with rent increases. (Starting salary for a new CS graduate at bigco in the Bay Area is like 105k).

Maybe not in SF, but if you don't have to work again there's no need to live in SF. 72k/year is well above the median national salary; it's absolutely retirement-level money.

This is not even close to never-work-again money unless you want to live Cambodia or something. There is no portfolio in the world that gives a >75% chance of a safe, comfortable lifetime of first world retirement with that amount of pretax capital. We're not even in the ballpark.

The whole point of taking money off the table is to keep it when the company goes bust. What you're describing is more similar to a loan where the collateral would be a slice of equity.

That is absolutely not true. The much more sensible reason is to take enough off the table to align investors and the management by (a) making sure the management isn't worrying about personal cash day to day, and (b) allowing the managers to prefer a home run swing rather than an early acquisition.

It's always controversial, and never more so in my memory than here.

What? "The point" of selling equity for cash is to get liquidity. That is the justification for allowing founders to do it early, not to reward them when their company goes bust.

In fact, when executives sell a bunch of stock right before public companies announce bad news or go bust it often warrants an insider trading investigation.

The point of selling the company is to get liquidity. The point of founder cash-out rounds is to align incentives between the founders and investors. Investors have an incentive to see the company "Go big or go home", because they spread their bets across a whole portfolio of companies. Founders have an incentive to play it much safer, because their whole net worth is locked up in one company and without cash-out rounds, they have a strong incentive to take the first acquisition offer that leaves them financially independent rather than shoot for the one that maximizes the VC's financial outcomes.

I'm not close enough to Secret to know whether the system functioned as intended here. It's possible (and suspicious, given the timing of the rounds and subsequent redesign that trashed their brand) that Secret rode the hype machine, cashed out at the top of the Secret bubble, and left investors holding the bag. But it's also possible (and likely, given public statements made and their hiring behavior) that this was a good-faith investment by VCs seeking a return in a company that honestly thought they were on to the next big thing and cashed out so that their risk-tolerance would be aligned as they shot for the next big thing. In that case, the founder cash-out functioned exactly as intended, it just didn't have the outcome anyone was hoping for.

What else would you want that liquidity for? Paying off the founders lets investors worry less about them wanting to sell before the investors want to sell (the investors don't have 99% of their net worth in the startup like the founders likely do).

It would be nuts to try and claw back that money. The founders surely had remaining equity which is now worthless, everyone is taking a hair cut.

> In fact, when executives sell a bunch of stock right before public companies announce bad news or go bust it often warrants an insider trading investigation.

They didn't just do this, the last round was in July 2014. It was a flash in the pan.

Also, the $6M cash could have also been worth $600M. In that case, would the OP want the investors to give some money back to the Secret founders..?

executives sell a bunch of stock right before public companies announce bad news or go bust it often warrants an insider trading investigation

Secret isn't a public company. Secret's investors are insiders themselves.


Why did the investors allow the founders to take cash off the table? To align interests. Meaning, to swing for the fences instead of making safe, conservative decisions and building a lifestyle business that would minimize the chance of shutting down.

With the money off the table, the founders would have the freedom to try risky things, to manage the company such that the chance of failure was very high but the payoff for an unlikely success would be even higher.

The company shutting down is exactly the outcome everyone expects to be a likely outcome. The investor has a portfolio of such investments, and does not care that the founders cashed in. The one hit they get will pay for all the founders they pay out.

In fact, investors won't want to blacklist these founders. The message that would send is, "even if you get to take money off the table, you should still manage conservatively, because you will be screwed for life if you have to shut your company down."

Investors do not want founders to be terrified of shutting down.

I wonder if the non-founder employees that took cash off the table during that financing round, will get to keep it?

...oh, right, only founders get to do this. Everyone else (who had <1% equity to begin with) gets zilch.

That's silly. Everybody involved understood why the founders would choose to do this. It has everything to do with risk and opportunity and likely nothing to do with some kind of malevolent avarice.

And bailing while returning a significant sum to investors takes courage. It's easier to sit in board meetings and pound the table and tell them how you're going to turn things around, even if you don't believe it.

> It's easier to sit in board meetings and pound the table and tell them how you're going to turn things around, even if you don't believe it.

I don't know if that's true. They have $3 million in the bank "off the table" money -- given that, it's probably easier to chill for a while and then start another company than waste time on a company you don't like anymore.

The point of letting the founders take some off the table is that the investors want to swing for the home run rather than a safer acquisition that the founders would probably take.

In fact, the investors probably let the founders take some off the table precisely to prevent the cashout. I suspect that Secret had an offer in hand from someone, but the investors wanted a bigger return.

The problem is that the little people who also had stock/stock options never got the opportunity to cash out and they would have almost certainly made the same choice as the founders.

Investors motto is "Go big or go home"

Here they are going home and saving some money too. Would you have the same view if Secret went on to make billions and require the Investors to pay the equity back to the founders. 6m could have been a billion there.

The only negative is if investors think the founders lacked imagination to put the money to use with a innovative Pivot.

Maybe there was no pivot in sight and then the best option is to return the rest of money and keep the 6m money the Investors gave up earlier for their big bet.

I'm assuming there was full understanding that some of the money will go to founders, with usual arguments - "brings long-term focus", "takes care of day-to-day expenses", "encourages building for the long-term instead of flipping a company", etc.

With that said, with Odeo, one thing that went down in history books is how Evan Williams graciously purchased the shares out of his personal fortune, thus making every investor even.

The irony is that if Evan Williams had not bought back the shares and had instead started Twitter out of the same corporate entity, the investors would've done a whole lot better. Instead of breaking even, they'd be sitting on a few billion.

The way the story gets told in "Hatching Twitter" is that some of those investors (SV Angel is the one called out by name) said "Cool, we'll take the money back, but this is earmarked for your next project", which still got them into early TWTR.

As others have pointed out, you're obviously wrong here. The investors are big boys who knew what they were getting into when they let the founders take money off the table. If anything, the founders are being stand up guys by returning the investment money rather than "pivoting" into the ground.

While I have heard of Secret the majority of my friends who are still in college haven't and it's all about Yik Yak on campus right now.

Same here. I am curious as to what caused Secret to disappear so suddenly. I am not a power user of social networks but something that really struck me was the really poor UI of Secret relatively to the crystal clear interface of YikYak.

Yep agreed, same confusion here. TechCrunch seems to cite the slow response to Cyberbullying criticism as one of the reasons for Secret's downfall, but doesn't YikYak have the same problem, if not worse with college students?? What gives?

Paging Michael O. Church to this discussion.

We curated one of the most amazingly talented teams...

Curated! #help

Good, and good riddance. Anyone who invested in Secret is a fucking moron. You can't monetize anonymous messaging, and no established company would buy technology they could build in an afternoon hackathon for the cost of a couple cases of Red Bull. If you need proof, 4chan's run at a loss for over a decade. Any investor in a VC fund that invested in Secret should sue their fund for mismanagement of money.

> You can't monetize anonymous messaging

I have always been curious about this part. What are the reasons you think one can not monetize anonymous messaging?

You can slap ads on anything. But the chance of slapping enough ads on a service to earn a multiple of a £130M valuation is pretty slim at the best of times, and when it's part of a trend of new "social" apps whose distinguishing feature is that they don't have network effects or targeting...

VCs backing startups whose primary hope of a major return is to get enough eyeballs to make Facebook nervous enough to buy them deserve to take losses more than most.

> it's part of a trend of new "social" apps whose distinguishing feature is that they don't have network effects or targeting...

May I indulge in a bit more? In these anonymous social apps, it is made explicitly clear that you are anonymous but traceable. It means that the service can identify your unique mobile device identity as it wishes to. You are ONLY anonymous in the eyes of the users of the app; in terms of the service provider there is NO difference.

What the op is saying that nobody has yet worked out a way to monetise anonymous messaging. I can think of a few ways that it could be done (none ethical), but the major problem is that as the barrier to entry in this market is so low it is hard to prevent your user base defecting if you try. There is little network effect and no content ownership by the users to prevent them walking away.

notahacker beat me to it, but how do you sell ads to an anonymous audience without compromizing the anonymity of the audience? You can't, unless you want to do cheap, dumb banner ads. They missed the chance to monetize up front by launching as a free app. Any investor who looked at this app and thought for more than ten seconds should have run screaming, or had security drag the founders out of the building. Or both.

35 Million boggles my mind for what amounts to very simple technology. I'm a dinosaur though and compare everything to hardware start-up costs.

I remember last year Techcrunch was publishing story over story about Secret, mostly as uninteresting as 'Secret app has an update and now it remembers where you left off'. And there was always someone commenting on the article 'Techcrunch stop trying to make Secret happen, it is not gonna happen.'

That artificial media boost brought users and huge expectations, but users did not stick.

This is going to be used as a case study of why not to let founders take cash off the table in early rounds for years to come.

To be honest, the investors knew what they were signing at the time. If they didn't do their due diligence to figure out how the application was going to make any money, they deserve what they had coming for them. That's the kind of shitty "let's throw money out the window, in case we hit one successful startup" attitude that'll get us in a bubble.

Founders acting in their own self-interest? That sounds like capitalism in action to me.

I believe it was highly criticized even at the time...

This is hardly unprecedented, it has happened for oversubscribed companies that subsequently imploded multiple times in the last few years.

"It rode the hype to massive funding, which allowed the two founders, David Byttow and Bader-Wechseler to each take $3 million off the table. They essentially traded stock for cash, putting money in their pockets though the business wasn’t earning any."

Wow. I guess their round was oversubscribed so they were able to sell this to the vcs. This is the first case where I heard of where a startup failed recently after founders took significant money off the table. I wonder if vcs will be able to use this as an argument to combat founders wanting to do the same in the future.

I have mixed feelings about the whole affair but I have to hand it to the founders. That was really smart of them to take life changing money when they could.

VC's offer this deal only when they are desperate to have an entry.

So yeah some VC's may use this argument but if the startup isn't desperate its the VC who will have to make the concession.

I just opened secret for the first time in months(years?), and the first post was a very explicit dick pic... Seems like an appropriate send off.

I still think there's a lot of room to do something interesting with social and mobile on the spectrum of Real Identity (Facebook) <-----> "Complete" Anonymity (Whisper).

Yik Yak and After School have taken a small step to the left by focusing on specific geographic areas (schools) and that has worked well - a community centered around a shared context/life experience. Secret also took a step to the left with the "Friend" and "Friend of a Friend" concept - one which was ultimately unsuccessful, I think because it threatened to pierce the veil of anonymity, so many people didn't feel safe posting their real "scandalous" content.

And of course with all of the anonymous apps you have the problem of bad behavior. So far we've seen community solutions to this (flagging, downvoting, karma - like here, Reddit, Yik Yak) and company solutions (moderating with 100 people in the Philippines, like Secret and Whisper - http://www.wired.com/2014/10/content-moderation/). It would be interesting to think if there might be others.

So the current "anonymish" apps have started from the right (anonymous by default) and either stayed there or moved to the left a bit. One of the things I've been thinking about recently is what would happen if you started from the left (Real Identity/FB) and moved to the right? Would the outcome be any better? I'm actually going to try it out and see with a new mobile app I've been working on - http://www.IAmOffTheClock.com

And as for them taking money off the table in their funding round - good for them. They weighed their offers and took one that eliminated their risk while giving the company enough cash to grow and still giving them a chance for a big payday. If Secret had hit it big, that would have been a very expensive $3M they took off the table. Investors wanted more stock, founders wanted some small amount of liquidity, and at the time everybody was happy, everyone believed, the graphs were all up and to the right, and nobody had a perfect crystal ball.

I stopped using it when they changed the app design to what it currently is. I loved it when it was a picture app.

It's hard to build a business on negativity when that negativity is directed at your own users. People like gossip but not when it's about them.

I hope that Ping [0], a side project by the Secret team that has nothing to do with Secret itself, is going to stick around in some capacity. I loved the little knowledge bits that it sent me randomly. I just checked the app and other than a couple weather notifications, the last curated content was pushed to me 2 weeks ago :(

[0]: http://iamping.com/

I've a question! Maybe totally unrelated, but isn't it always a bad sign when founders sell their shares before even reaching 1 year?

Doesn't that put a red flag on how the investors should look into it? Or it's just the hype & hockey stick presentations that doesn't matter to some investors?

Well in the last few months activities in the app was similar to omegle.

People posting nude photos and stuff.

I think the curation of content was a huge challenge for them., and also not to mention the new app design was not at all intuitive with lots and lots of bugs.

But having said that, I had lot of hope in this app.

Can we speculate as to the timing of this with the DoD marriage with VC firms and investment groups in Silicon Valley, or is that too conspiratorial?

So, what can one develop using this beside "hello, world?"

Can I build a cross platform GUI application? Is there a servlet container? How about an IDE?

The founder pretends that the investors have put money on the table to build a great team and a great product. If the problem resides in the product, I think pivoting is the least they can do in respect of their investors.

Giving back the money is ridiculous, especially when they pretend to be guided by the motto "Innovation requires failure".

In the article, it says they made this decision after much discussion with the board. The board is the investors, so the investors are probably OK with this.

It's likely the investors were investing in "the next big social network". When it became clear that this wasn't going to be successful, they were faced with the choice of get 80% of their money back, or to "invest" (as it were) that money in the remaining team.

Maybe the remaining team had an idea, but the investor didnt want to invest in that idea. Or maybe the team was tired and didn't want to continue, and the investor would prefer their money back then try to force the team to continue.

I wonder how long it will take to leak their data, spec those associated with facebook logins.Not surprised that they failed, it had plenty negative and offending posts and no cats/burgers/porn.

I've only ever heard bad things of that team.

Arrogant, mean, shameless...

I'm happy to see that this happens, when they cloned yik yak it was one of the most pathetic moves I have ever witnessed in the silicon valley

Can someone explain to me why people return money to investors?

Legal reasons? Altruistic reasons? Selfish reasons (maybe that keeping it would hurt their reputation and make them feel guilty)?

Reputation reasons. If the co-founders were to raise money for another venture in a few months/years, which story would click with investors better - "iterated, didn't achieve product-market fit, pulled the plug" or "wasted time and investors' money".

Each case is specific though, but at some point, if the product has no growth and key talent has left the building, even if you do have six-seven digits in the bank, new employees are not exactly knocking on your door, users are not over-running the servers, remaining employees quietly send out resumes, so what would you be spending that money on?

One reason is when the investors own > 50%, control the board, and decide to recoup 10 cents on their dollar.

But I've known entrepreneurs who made the decision independently, feeling it was the right thing to do.

And it is the right thing to do if the company has no other prospects or the team is falling apart.

But even so, returning the balance just keeps some salt from the wound. It doesn't make anybody happy.

> And it is the right thing to do if the company has no other prospects or the team is falling apart.

Why do you say that? If for moral/altruistic reasons, that doesn't make sense to me - if you have $x million, do you really think the best place to donate it would be to VCs? I don't know anyone who donates to VCs, so I assume the answer is no. (sorry if I come off as harsh, I don't mean to - I just don't know how else to put it)

you don't have $x million. The company you founded, and no longer wholly own has $x million. It's a rather different thing.

I mean, unless you are talking about the money for the personal shares the founders sold, the money, as it was said, that they "took off the table" - if that's the case, then I'm completely with you (but I didn't see any indication that they were giving that money back.)

I was under the impression that someone had decided to give the money back to the investors. That they had a choice, presumably, to do what they want with it. Is that not true? To what extent were they restricted?

that depends on who controls the company, something that usually has to do with ownership percentages, something that wasn't revealed in the article.

The thing is, though, even when you control the majority of the company you do have some legal and ethical obligations to the minority shareholders.

I see. Well, my point applies to any situation where someone does have the freedom to do what they want with (a large chunk of) money, and chooses to give that money to a VC, rather than, say donating it to an effective charity. Am I the only one who sees something wrong with that?

One can donate as much of their personal fortune as they please. The money on the company's bank account is shareholders'.

Spending it on any personal mission not related to core business (whether charity, space travel, new car or hookers) is a great way to get some headlines with your name attached to words fraud and embezzlement.

You can certainly try to circumvent that by paying yourself a bonus out of the company money, and then donating that to charity, but it seems even shadier and introduces wonderful tax compexities with IRS come next year.

that seems like an astonishingly unlikely situation.

> It's just that I hear of stories that talk about founders giving money back to the investors as if it were admirable.

The other option is they keep the company alive until $0 is left and return nothing.

Donating to charity isn't an option.

Maybe. It's just that I hear of stories that talk about founders giving money back to the investors as if it were admirable. Admirable implies that a decision was made. But maybe I'm just misinterpreting.

removed regrettable bit - but he or she is right about the options; ethically and legally, they could have continued to try to make it work, or they could shut down the company, sell the assets and distribute the proceeds to the creditors and then the owners of the company (the investors)

Really, one could ethically do either one of those things; it's just that depending on the situation and your perspective, well, probably one or the other is the better choice.

Now you seem to be arguing that the choice between continuing to run a company or not is not one that has an 'admirable' option. And maybe from you point of view, it doesn't really matter.

There's a stadium down the way from my house. when the football player makes a home run or whatever, well, personally, I don't see how that matters; I don't care, and I'm mildly pissed that I'm going to have to pay for the bonds to build the eyesore. But even so? I don't go to football forms and tell people that the large man getting the ball in the hole or whatever isn't an admirable achievement. It's the game those people want to play, and that's fine.

I personally find business really interesting, really in a similar way to the football fan. Most of this stuff doesn't really matter. Some of it does, but even that stuff doesn't matter as much as people say it does.

To me? the decision to give the money back to the founders, rather than shitting the money away when you know you have been beaten, is admirable because investors seem to select for overconfidence; quitting before you've spent every cent implies that you were able to project that overconfidence to the investors, but that you were able to remain a rational person.

I mean, it's not world peace, sure, but it implies some attributes which within the context of the business game are pretty important.

I guess I just clicked the wrong button. Not really sure how that makes me an ass. Thanks though.


I meant no real insult. I was having a shallow conversation with a troll, I was repeating something someone else said, and misjudged the tone.

You want me to delete/edit my previous post? there, I did; I'm not sure if that's more appropriate or less.

You make a good point with the guidelines; I'm far too cynical and negative to participate in these sorts of discussions with this sort of a community.

> ovechtrick is an ass for responding to me rather than you

It does seem odd that he/she did that, but maybe it was just a mistake.

Anyway, thank you + others - I understand now. I now see that donating to others wasn't an option, and that the choice was between a) running the company into the ground or b) returning the money to investors. Given that, I'm inclined to agree that b) is the admirable choice. And probably also the selfishly strategic one too.

They decided to call time and close up shop with money still in the bank (which has to be returned to the investors unless some other agreement with them is made, the founders can't just run off with it and donate it to the cat society), rather than keeping on running the company until they couldn't pay the bills anymore.

What were some of the key contributions from Secret to wider culture?

Was it — Julie Ann Horvath's decision to disclose big cultural problems at the company GitHub?

Was there anything else?

Secret is probably a very successful social experiment.

feelings.blackfriday is still up though

How much do Unicorn horns fetch on the black market?

Pound for pound, about the same as black swan foie gras.

I certainly don't think this is the end. Was writing a comment but decided I will post it on my blog https://blog.scrape.it/secret-shutting-down-isnt-the-end


I knew day one the idea and execution was going to fail.

You could say this about every single startup, and you'd be right 99.9% of the time. The other 0.1% you'd find a way to make yourself right.

It's a really, really silly thing to say.

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