News & Analysis

Yik Yak may have just raised $US62 million, but behind the scenes there is some ‘founder’ drama.

- November 25, 2014 4 MIN READ

The app Yik Yak has been labelled ‘controversial’ by many, a lot of people were surprised when it raised two earlier rounds this year totalling to US$11.2 million. Today, announced less than ten hours ago, the app has added a further US$62 million to that injection via another round of funding led by Sequoia Capital. This allegedly values the very young company at somewhere between US$300 and US$400 million, less than a year since it officially launched.

For those of you not in the know, Yik Yak, founded by Stephen Brooks Buffington and Tyler Steven Droll, is an ‘anonymous’ messaging app (users can choose a username and identify themselves if they want to) that marries the concept of twitter (sending out short form updates / messages / thoughts) with the mechanics of Reddit or Hacker News (users upvote for updates they like or find interesting). The app only shows you updates that have been made within a one mile radius of where you are, which explains the user acquisition strategy of targeting college campuses in the United States as a growth strategy. Doing this starts to creates silo’s of communities on the platform, making the content more applicable to the user.

Naturally, Yik Yak has not taken long to spread beyond the borders of the United States and make its way into Australian universities and schools. In fact, Yik Yak are currently looking to hire Campus Representatives based in Australian uni’s to continue to accelerate the already, from what I can see, impressive organic user growth it has experienced here.

But with fast growth, often comes controversy, and the ‘anonymous’ aspect of the app has drawn a considerable amount of criticism. Right now as I write this, I am near the Sydney University campus and therefore am picking up the feed from users in and around that area. For the most part the updates are pretty funny or vulgar, pending on your humour. Here are a couple of examples:

Some people use the app to make silly observations.

Saw two construction workers talking outside. I know what they were building: Friendship

Others are using it to over share.

Got a wristy in the bathroom at the courthouse hotel. Today is a fine day to be alive.

And some use it to talk specifically about people / groups on campus.

I wish Paul’s college boys were more approachable – their rolled up chinos just get me

Whilst the latter would (a) mean nothing to anyone that doesn’t know what ‘Paul’s College’ is and (b) is actually quite a benign and somewhat boring status – you can begin to see the harmful territory that anonymity allows users to tread. Even though the app is only for users aged over 18 or 17 with a guardians permission, there is really no robust system in place to stop the app penetrating the high school system. In its short life span the app has already experienced a number of bullying related incidents.

In a couple of cases, some highschools in the United States have chosen to ban the app on campus. But the real scary and gut-churning reality of how Yik Yak can really be used as a dangerous tool came last week when two California schools completely shut down for a couple of days due to someone anonymously posting messages about a ‘mass shooting’ that was going to be happening on campus at one and a bomb threat at the other. This is the dark side of messaging technologies, and to be fair to the founders, apps like Twitter, that aren’t anonymous in nature have also experienced its fair share of ‘ugliness’ by users.

Perhaps the biggest piece of gossip, ironically surrounding the app that pretty much helps facilitate the same thing, is that both Buffington and Droll are being sued by a fellow Furman University alumni, Joseph Warstler. In a case that is shaping up to be extremely similar to that both Facebook and Snapchat, Warstler is claiming that he is entitled to one third of the company. According to documents published by Business Insider, both Buffington and Droll tried to cover up any evidence of Warstlers ownership. Here is an excerpt from the documents filed to the courts.

“Plaintiff, Buffington, and Droll partnered up to work and pool money together to develop and market various mobile applications including Yik Yak, a social media mobile application that allows people to post anonymously to other users within a 1.5 mile radius. The three of them agreed, in writing and orally, to split ownership of the Yik Yak partnership into 1/3 each. After acknowledging in writing Plaintiff’s ownership interest in the Yik Yak partnership and unsuccessfully attempting to buy Plaintiff out, Buffington and Droll did the unthinkable: they brazenly kicked Plaintiff out of the partnership and claimed that Plaintiff owned nothing in Yik Yak. To cover things up and erase any evidence of Plaintiff’s ownership, Buffington and Droll dissolved the company under which they and Plaintiff co-developed and co-owned Yik Yak, and transferred the company’s only asset — the Yik Yak application — into a newly-created company.”


Complaint With Exhibits (Warstler v. Yik Yak)


Whatever happens in relation to the court case, there is a reality that I think needs to be faced. Yik Yak, is perhaps one of the very few new social networking tools to launch this year that I feel WILL actually hang around. The hyper-locality feature is perhaps the most valuable feature, especially when it comes to looking at monetisation down the track – and advertisers are willing to pay big money to tap into that type of targeting. Already ‘gay dating’ apps like Grindr and Scruff are using hyper-local advertising as valuable revenue model – and unlike the latter, Yik Yak will have a lot more mainstream appeal to advertisers and a larger user base within a year.