How Tyler Droll and Brooks Buffington built Yik Yak, an anonymous messaging app with valuation now approaching $400M
Alyson Shontell / Business Insider : Tweets: @sriramk and @ajs Tweets: Sriram Krishnan / @sriramk : Love this deep piece on YikYak for the bit on how @bonatsos found them. Just old fashioned AppStore hard work. http://www.businessinsider.com/ ... Alyson Shontell / @ajs : Biggest ? I had for VCs is why Yik Yak should be worth $400 mil when it has <10 mil MAUs. They cite crazy engagement http://www.businessinsider.com/ ...
Context & Ripple Effects
Business Insider's March 2015 profile of Tyler Droll and Brooks Buffington captured Yik Yak at its high-water mark: a valuation approaching $400M built on what VCs called crazy engagement, despite fewer than 10 million monthly users. The timing was already contested — a month earlier, Gigaom reported that growth had flatlined after Sequoia's investment, raising the fad question the profile's valuation had to answer.
The rest of the coverage reads as that question being answered slowly: a co-founder lawsuit over a claimed one-third stake settled in April 2016, the same month the app showed zero significant growth in a year, an engineering exodus ending in Square buying the team for under $3M against ~$74M raised.
First-order effects
- The $400M mark rested entirely on engagement-per-user claims rather than scale — with under 10 million MAUs, any stall in daily usage directly threatened the round math Sequoia and later backers had priced in.
- The founders' equity structure was already a live liability: the classmate who said he was cheated out of one-third of the company forced a settlement in 2016, before the company had any liquidity event.
Second-order effects
- Internal confidence broke before the market did — CTO Tom Chernetsky left in April 2016 amid falling downloads and traffic, and by early 2017 the lead mobile developer was shipping his own group-messaging app, Hive, outside the company's core product.
- When the consumer business failed to reignite, the only buyer left was for parts: Square paid less than $3M for the engineering team, meaning every dollar of the ~$74M raised was effectively written down.
Third-order effects
- Yik Yak became the template case for anonymous, location-based social apps: hyper-engaged niche audiences produce headline engagement metrics that don't survive contact with flat user growth, leaving acquirers to value only the team.
- For consumer VC, the gap between the near-$400M mark in 2015 and the sub-$3M acqui-hire in 2017 hardened skepticism around valuing pre-revenue social apps on engagement intensity alone.
The trend: Consumer social valuations set on engagement density rather than user scale proved brittle, and Yik Yak's arc from near-$400M to a sub-$3M team sale became the reference point for the anonymity-app boom's collapse.