Yik Yak, the anonymous messaging app sweeping college campuses nationwide, recently announced that it has closed a $62 million round of financing led by Sequoia Capital. Mike Isaac, ((Yik Yak, an Anonymous Messaging Start-Up, Said to Raise $62 Million, N.Y. Times (Nov. 24, 2014), http://bits.blogs.nytimes.com/2014/11/24/yik-yak-an-anonymous-messaging-start-up-said-to-raise-62-million/.)) This was the messaging company’s third round of venture funding in the past seven months, bringing its total funding raised to approximately $73 million. ((Id.)) While to outsiders this valuation might seem crazy, in comparison to other recent messaging valuations, it is actually fairly reasonable. ((See William Alden, In WhatsApp Deal, Sequoia Capital May Make 50 times Its Money, N.Y. Times DealBook (Feb. 20, 2014), http://dealbook.nytimes.com/2014/02/20/in-whatsapp-deal-sequoia-capital-may-make-50-times-its-money/.))
An interesting aspect of Yik Yak is the barrage of legal actions surrounding the messaging app. First, there is the pending suit brought by a former classmate and fraternity brother of the app’s two founders. Doug Warstler is claiming he was unfairly ousted from the ownership of Yik Yak by its founders, Tyler Droll and Brooks Buffington. ((Ellen Huet, Popular Teen App Yik Yak Sued By Supposed Frat Brother Cofounder, Forbes (Nov. 11, 2014), http://www.forbes.com/sites/ellenhuet/2014/11/18/yik-yak-lawsuit-frat-bro/.)) Warstler claims the trio had formed an app development partnership during their time at Furman University in Greenville, South Carolina. ((Id.)) Warstler alleges that a previous app, which ultimately flopped, included a feature built by Warstler that allowed users to post anonymously (the foundation of Yik Yak’s differentiation strategy). ((Id.)) Additionally, Warstler claims that he played a critical role in marketing Yik Yak at Furman, where the app first took off. ((Id.)) Warstler alleges that after he refused to be bought out, Droll and Buffington dissolved the old partnership and created a new LLC for Yik Yak. ((Id.)) The same firm that recently represented the ousted Snapchat cofounder, Reggie Brown, is representing Warstler. ((Id.)) It’s unlikely this matter will ever be resolved in court, but Warstler could be in for a large settlement.
Aside from the controversy surrounding the founders, there have been numerous cases brought against Yik Yak’s users. There have been at least 11 college students this past semester charged for threats of violence posted to Yik Yak. ((Alexandra Svokos, Yik Yak Threats Lead to Charges for Students, Huffington Post (Nov. 25, 2014), http://www.huffingtonpost.com/2014/11/25/yik-yak-threats-college_n_6214794.html.)) That figure includes students from Drake University, the University of Albany, Pennsylvania State University, the University of Nebraska-Kearney, Towson University, the University of Georgia and Widener University, and the University of Southern Mississippi. ((Id.)) Some of these students claim it was nothing more than a prank, but university and police officials have been united in the stance that the sincerity of the threat is irrelevant. ((Id.)) While Yik Yak has been helpful in identifying the guilty party in these instances, providing police the IP address and if possible GPS location of the message, one wonders about the utility of anonymous message boards in general. ((Id.)) Whether your concern is threats of violence or cyber bullying, an anonymous platform that reaches an entire college campus is a large soapbox for someone with bad intentions.
If the money is any indication, and it usually is a good one, then it appears Yik Yak is undeterred by any of the legal or social controversies currently surrounding it. Only time will tell if Yik Yak is headed for a multi-billion dollar valuation like Snapchat and WhatsApp, but it appears to be trending that direction.