The Rise and Fall of The ‘Next Big Thing’

The Backstory

A couple of months ago I did a debut article all about Meerkat and its quick rise to fame in the entrepreneurial and tech sectors. Meerkat pioneered the field of live reporting — meaning what Instagram did for daily activities, Meerkat did for sharing insight, news, and advice.

Then I did a comparison article taking Twitter’s most recent acquisition, Periscope, and compared Meerkat’s prospects for success with its newest competition hitting the marketplace. Some said Meerkat was destined for ruin, as a pioneer in social media with clout such as Twitter backed an app that essentially did the same thing. Comparatively it’s as though someone opened a Shake Shack right next door to a mom-and-pop burger joint. Why go to a lesser known eatery when a reputable and well-known restaurant is right next door — no gambling on whether the food is good or not, no wondering if you’ll be disappointed — just a guarantee of service and quality that’s attached to the Shake Shack moniker. That’s what Periscope did to Meerkat. With the might of Twitter behind it, many said Periscope doomed Meerkat to fail. And they were right.

I’ll admit, since the beginning I was a crusader for Meerkat, holding regular live streaming sessions offering advice and answering questions from budding entrepreneurs, but at some point it became stagnant. The exposure I was getting started to plateau, and I couldn’t figure out why. Were those who foresaw Meerkat’s demise finally seeing their prophetic sight come to fruition? My confidence in Meerkat began to shake and falter.

Meerkat and Periscope made livestreaming hip again — at least for a few weeks, before much of the hype died down. After all, both are tools for broadcasting what’s happening to the streamer in real time, which often means sharing the mundane goings-on of everyday life that can get old fast.

About three days after it received a lavish new funding round, Meerkat died an ugly and embarrassing death. It is hard to decide whether the Great Meerkat Debacle that has unfolded over the past few months is a tragedy or a comedy — probably a bit of both.

The mobile streaming app that had whipped U.S. tech journalists into a frenzy announced $14 million in new funding back in March. Money poured in from Jared Leto, Greylock Partners and other illustrious sources. On the same day, Twitter launched its rival streaming app called Periscope. Apparently, investors didn’t stop to ponder why Meerkat people rushed to cash in so aggressively only a month after the app had debuted.

Well, we now know why.

Where Did It Come From?

After a year and a half of working on his video startup, Yevvo (recently re-branded as “Air”), Ben Rubin had started to think about pulling the plug. The app had been conceived as a way of letting you share live video with your friends, but soon accrued a set of arguably useless features: location tagging, text comments, a variety of login options. Yevvo had acquired 400,000 users since launching in August 2013, but most weren’t very active. “There was no heartbeat,” Rubin said.

In December of that year, Rubin killed it for good, emailing the app’s users to let them know that Yevvo was no more. On February 27th, he unveiled its replacement: a radically simplified iOS app for broadcasting live video to your Twitter followers. The dead-simple app had two options — you can schedule a stream for later, or start one now. When it started, a tweet would notify your followers that you’re broadcasting, and they could follow along and comment as they watch. Sounded perfect, right? And for a while it was.

But Why?

The ugly truth that U.S. tech media has declined to mention even in passing is that Meerkat had never been a hit to begin with. All those breathless media reports about “the hot new app” and “the break-out app” were deeply misleading at best — and cynical legerdemain at worst.

Meerkat’s highest daily ranking on the U.S. iPhone download chart was No. 140, on March 20th. At this point, the app had already generated thousands of news stories and blog posts, most of them enthusiastically describing it as a hit. But actual American consumers never showed the slightest sign of warming up. Nowadays, Meerkat is around No. 212 on the top lists, and that’s just in the social media category. Overall, that number steadily drops, while Periscope maintains a cozy No. 17 on the list.

Meerkat’s “success” was the creation of a handful of West Coast tech bloggers who managed to lure major newspapers into covering a phenomenon that did not exist.

Despite media coverage that most new apps would kill for, Meerkat failed to get anywhere close to the top 100 chart in the U.S. –even though on a typical week, a dozen new apps crack the top 100. Meerkat is an app that underperformed your average Croatian Flappy Bird clone or the 10th most popular diner simulation of the past year. Yet dozens of notable tech reporters kept tweeting and blogging about Meerkat as the biggest break-out of the year.

There exists no doubt that this media frenzy explicitly affected last year’s funding round. Looking solely at the download metrics of the app, the $14 million round is unbelievable.

There is also no doubt that if Jared Leto and his merry band had realized a week ago that Meerkat would drop out of the top 500 iPhone app chart by that Sunday night, they would have slammed their check books shut in a hurry. They were obviously blinded by the tech journalism flimflammery that has gone on unabated in America in recent weeks.

Writing about the mobile app industry is a curious niche; you don’t actually have to understand download statistics, different product segments or other industry fundamentals. Unlike movies, fashion, cars or the book industry, you don’t have to focus on products that possess real consumer appeal. In the United States, app industry reporters can simply choose to cover an app their buddies claim is cool and then prioritize the 200th most popular app in the country over apps that have actual heft and significance.

As seen in the photo below, courtesy of MeerkatStreams.com, Meerkat’s live streams never rose above 10–20 at one time, with live stream counts only at about 4–5 at key times during the day. This is definitely exemplifying the lessened appeal of the app as I discussed earlier due to many changes in the core functionality and focus of the app.

Also worth noting is the emergence of talk-show-on-the-go platform blab.im, offering a more streamlined and simplistic version of the live streaming platform, making it easier and more convenient for streamers. Lots of Meerkat’s power users (seen below) migrated over to blab.im after Meerkat’s appeal started slowly dwindling.

Self-Sabotage, Anyone?

After Periscope had released, Meerkat’s execs felt they needed to get some celebrity face-time, as well as add a bunch of new features to the app — and strategy that sounded all too familiar from the past. The company spent buckets of money on hiring people for networking and hiring celebrities, which attracted some fake and latent users, however the original success of the app was in its core functionality and the future of live streaming, in addition to the community building (SEE THIS ARTICLE) occurring as a result of the app. However, the shift of focus into the media relations area really hurt Meerkat, as they kept hiring people who handle media relations and shifting from a pretty lean company to an extremely fatty one, overspending on extraneous items such as assistants and unnecessary additions to the company.

Although you can’t fault Meerkat for its celebrity reinforcement strategy (because Periscope did the same thing), it begs the question of why it worked for Periscope and not for Meerkat. The secret is that Periscope didn’t package its celebrity endorsements with a change in the features that it held since its inception — and Meerkat did. By putting features on the back burner, Meerkat’s execs essentially threw it to the flames. These added features in Meerkat’s interface translated to a decline in its appeal due to a less than ideal user experience, which could make or break any app.

In their focus on celebrity endorsement and usage, Meerkat had lost most of their power users, @norasegura, @geoffgolberg, @imvictoriafratz, @thefunkyfairy, @m23mclaughlin, @themalia, @herbiemerrin, @nikkiannsilva1, @tamipunch, @torontopizzeria, @vincenzolandino, @jaymini_mistry, and @creative7inc. All of these users either don’t stream anymore or stream significantly less on Meerkat that were one-time huge advocated and power users of the app.

In addition, Meerkat’s users focused on achieving status via the leaderboard that the app offered. The higher up on the points ladder, the more exposure a user would obtain, and therefore their name would get further out there. However, there was often suspect tampering with the points leaderboard, making it impossible for users to climb the points ladder — a feature they held in high regard.

If you were one of the original few, you recognize the faces above. They formed the basis for the Meerkat user community, and now are rarely seen streaming at all. All of the newcomers that Meerkat incorporated into its fold never took part in the nascent stages of the app, and therefore never understood the importance of building the platform’s community.

Periscope’s growth rate was also so alarming that Meerkat’s founders had to match it to compete, but instead of focusing on community building and improving their user base, they focused on spending money on a celebrity who would use and endorse the app for a quick minute, and then leave because they saw no use for it. This teaches a lesson in lean operations, as the company had an abundance of money they shouldn’t have taken in the first place, since if they took less, they would’ve been forced to stay lean and not over raise and over spend.

An Eerie Comparison

The whole sordid Meerkat mess is an eerie echo of what happened with Secret, another failed social media app with incredible media coverage.

Soon after its launch in January 2014, Secret was pronounced the next huge social media app by a preening murder of California media crows. Hundreds of stories about the importance of Secret were published in February 2014. The app peaked at No. 130 on the U.S. iPhone download chart — and then it dropped out of the top 1000 by end of February.

It was an utter flop and all subsequent relaunches failed miserably. Yet it managed to raise nearly $9 million in March despite the February collapse… and then another $25 million the following July.

Of course, the app never recovered. Apps that don’t crack the top 100 during their debut run almost never turn out to be viable, no matter how much they are tinkered with. This is the basic axiom of the mobile app industry.

Almost precisely one year later, the same crew of tech “journalists” who proclaimed Secret would be massively influential, declared Meerkat the next huge social media app. With almost supernatural synchronicity, Meerkat has just peaked at No. 140 on the U.S. iPhone download chart and gone into a heart-stopping tailspin after raising a ton of money from credulous investors.

How is it possible that people who have witnessed the lightning fast collapses of hype vehicles like Secret and Path in the recent past have learned nothing?!

For the Future

For now, Meerkat remains limping on its last leg, having lost out to its rival Periscope. What remains to be seen is whether a “miraculous recovery” is in the cards for Meerkat, or whether we should start picking out its tombstone. One thing is for sure, though. It’s going to be one hell of a spectacle.

And for now…

Brandon Rubinshtein, the author of this article, is an entrepreneur based in New York City with vast experience in startups. His latest venture is Verre, a “polished black car alternative that operates a cut above the industry standards”. Check it out!