App scored some high profile backers, but struggled to retain users let alone achieve a path to monetization

"If you built it, they will come" -- or at least that's the argument Snapchat has made regarding monetizing its large and lively user base.  And many investors have bought that line, giving a company giving a nearly $20B USD valuation to a company whose financials have been treated like a black and who has been rumored to have under $100M USD in annual revenue.

Indeed, one might think it would be easy as pie to get millions from Silicon Valley venture capitalists riding the high of the anonymity app/service bubble.  But there's one flaw in that argument -- revenue aside, it's really not that easy to get and keep engaged hundreds of millions of users.

Secret app premise

Startup "Secret" found that out the hard way, closing its doors this week.  Buzzfeed was the first to deliver news of the $35M USD company's swan song.  And in a post to Medium on Wed. entitled "Sunset", Secret's CEO David Byttow confirmed the bad news:

After a lot of thought and consultation with our board, I’ve decided to shut down Secret.

This has been the hardest decision of my life and one that saddens me deeply. Unfortunately, Secret does not represent the vision I had when starting the company, so I believe it’s the right decision for myself, our investors and our team.

I’m extremely proud of our team, which has built a product that was used by over 15 million people and pushed the boundaries of traditional social media. I believe in honest, open communication and creative expression, and anonymity is a great device to achieve it. But it’s also the ultimate double-edged sword, which must be wielded with great respect and care. I look forward to seeing what others in this space do over time.

The premise of secret was to allow users to post anonymous confessions to a social media hub via mobile apps.  Users would then discuss and vote on the confessions.  Launched in Feb. 2014, the service rode a wave of press buzz that only grew when Google Inc.'s (GOOG) Google Ventures fund and iconic Melo Park, Calif. venture capital firm Kleiner, Perkins, Caufield, and Byers (KPCB) backed Secret to the tune of $8.6M USD a month after its launch.

Secret App overview

But secret suffered from a couple of tough challenges.  First, it was not alone -- the app "Whisper" (backed by $21M USD from rival Menlo Park VC firm Sequoia Capital) had a nearly identical premise.  And Whisper was perhaps better targeted at those most craving anonymity -- teens (Secret was marketed as a "techie" product).

But the second, far greater structural problem with Secret was users.  After quickly hitting 16 million users in 2014, the app fell out of the Top 1500 listing in Apple, Inc.'s (AAPL) app store and reports indicated the user base had dwindled to well south of 10 million over the course of this year.  Perhaps 5 million or less people were even weekly logging on the service over the last couple months.

Ultimately the death of user growth and apathy amongst its current users would prove the death of Secret.  Because while it's okay to be Snapchat and entertain billions in valuations that perhaps eclipse your annual revenue by nearly three orders of magnitude, if there's one thing that's not okay it's failing to retain and grow your service's userbase.

To its credit, Secret tried.  Last December it shuttered its less used online sharing webpage client and went all-in with the app-driven service network.  But that failed to recapture the buzz or stop the user bleed.  Secret downsized.  According to TechCrunch it was down to only 10 employees by the time it hit rock bottom and decided to close this month.

Secret App

While Byttow's account makes it sound as if it was up to him to close the company, he likely was under substantial pressure from his lofty backers to lay this Secret down softly to its final rest.  And so it was.

RE/Code offers up perhaps the most bitter irony, revealing that the slower growing Whisper was still alive and well and had hit 10 million users this week even as it watched its competitor die.

Aside from being better targeted, one thing that seems to have helped Whisper was a subtly nuance of its implementation.  Where as Secret let you use names in your posts and even more dubiously informed fellow secrets users if posts came from one of their contacts, Whisper banned the user of names and doesn't show your relationship to the poster.  Perhaps above all else, meaner social spirit of Secret's service that made it more of a nasty and short lived rumor, while the more conscientious Whisper is growing louder by the day.

For all its flaws there is one thing that will surely be missed about Secret -- that peeking fox logo.  It was darn cute.  RIP, peeking fox, some Secrets were never meant to be shared.

Sources: Secret CEO David Byttow on Medium, TechCrunch, Buzzfeed, RE/Code

"This is about the Internet.  Everything on the Internet is encrypted. This is not a BlackBerry-only issue. If they can't deal with the Internet, they should shut it off." -- RIM co-CEO Michael Lazaridis

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