EFiled: Nov 15 2023 06:59AM EST

Transaction ID 71398047
Case No. 2023-1157-
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

ABRAHAM SHAFI and GENRIKH

KHACHATRYAN, individually and derivatively,
on behalf of GET TOGETHER INC., and
KRUTAL DESAI, C.A. No. 2023-____

Plaintiffs,

v.

CHI-HUA CHIEN; SERENA DAYAL; MIKE

MAPLES, JR.; SCOTT KAUFFMAN;
GOODWATER CAPITAL, LLC; GOODWATER
CAPITAL III, L.P.; SB INVESTMENT
ADVISERS (US) INC. (aka SOFTBANK
INVESTMENT ADVISERS), and FLOODGATE
FUND V, L.P.,

Defendants,

and

GET TOGETHER INC.,

Nominal Defendant.

VERIFIED COMPLAINT

1. On June 23, 2023, a spokesperson for social media platform IRL told

the world that 95% of IRL’s users were “automated or from bots.” It was a stunning

admission. It was also a flagrant, outrageous lie.

 2. The false “admission” was the culmination of a series of moves

orchestrated by the three venture capital board members at IRL: 1 defendants

Chi-Hua Chien of Goodwater Capital, Serena Dayal of SoftBank, and Mike Maples

of Floodgate (the “VC Directors”). The VC Directors, working with Chien’s

longtime ally Scott Kauffman (whom they had improperly installed as the

Company’s CEO two months earlier), used the “95% bots” lie as an excuse to shut

down the company and return capital to shareholders—meaning, return capital

largely to SoftBank, Goodwater, and Floodgate, who stood to recover the lion’s

share of the company’s $40 million cash on hand because they owned preferred

stock. Rushing to shut down the Company on false pretenses was the last in a series

of breaches of duties committed by these four individual defendants.

3. And here’s the thing: Chien, Dayal, Maples, and Kauffman had to have

known that the “95% bots” “admission” was a lie. Why? Because they had access to

extensive evidence that disproved the lie.

4. As an example, when Goodwater was courting SoftBank to invest in

IRL in 2021, Goodwater commissioned an independent survey of 700 U.S. adults

aged 18–30. The Goodwater survey found that 7.4% of those surveyed “actively

use” IRL. It defies logic that Goodwater would have surveyed bots. In Goodwater’s

1
IRL, which is shorthand for “in real life,” is the name of the social media platform and
app owned by the company Get Together Inc. This Complaint uses the term “IRL” or the
“Company” to refer to the company itself.

2
own words at the time, the 7.4% finding was “in line with the company’s reported

10% active rate amongst that same U.S. audience.” And the survey results equated

to millions of active, human users, just in that age cohort—a number completely

inconsistent with the false “95% bots” claim.

5. As another example, IRL’s then-outside counsel Faegre Drinker Biddle

& Reath LLP (“Faegre”) conducted its own lengthy investigation in late 2022 and

early 2023 into various bot-related allegations by former IRL employees, with

Faegre commissioning an extensive analysis by the independent technology

consulting firm Celerity. In January 2023, Faegre reported to the IRL Board

(including the VC Directors) that, based on its investigation to date, concerns about

a significant bot problem on IRL’s platform were unfounded. That was later

confirmed by Celerity’s months-long analysis, which Celerity completed in or

around April 2023, leading Faegre to conclude that the former employees’ concerns

were unfounded.

6. IRL’s Vice President of Engineering, who had been hired recently from

Snapchat, likewise confirmed to the IRL Board (including the VC Directors) in

multiple meetings in late 2022 and early 2023 that the Company had invested

substantial resources into successfully uncovering and removing bots from the

platform and did not have a significant bot problem.

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 7. Finally, Google Metrics—one of the gold standards in authenticating

actual human users—independently showed approximately 17 million unique

sign-ins to IRL authenticated by Google in April 2023.

8. So, what “evidence” did the VC Directors and Kauffman have to

support their “95% bots” claim? A single report hastily compiled in a few weeks

(versus Faegre and Celerity’s four months) by a different consulting firm, Keystone.

Even ignoring all the contrary evidence, the Keystone Report was not remotely

credible.

9. For instance, Keystone based its “95% bots” conclusion in part on the

fact that a huge number of users left the platform after the VC Directors removed

IRL co-founder Abraham Shafi as CEO on April 28, 2023. While a huge number of

users did leave the platform, Keystone ignored that they left after IRL’s platform

suffered a continuous series of extended outages throughout May 2023 (with one

lasting more than 24 hours). Even worse, a preview of the results of the report to the

Board included the false assertion that there were no user complaints or known

problems with the IRL app after April 28 that would otherwise have explained the

drop-off in users. Quite the contrary, IRL’s massive loss of users after the series of

outages was further evidence disproving the “95% bots” lie. After all, one would

have to be a human being—not a bot—to experience the kind of frustration that

would lead a user to refuse to return to the platform once it was back up and running.

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Bots programmed to automatically crawl the platform would presumably get right

back to it once the platform’s service was restored. Yet the Keystone Report

nonetheless concluded—with no explanation or acknowledgement of the outages at

all—that the loss of users was “likely . . . not representative of organic human

activity” on the platform.

10. Why would investors who had collectively invested nearly $200

million into the Company over several years promote this horribly damaging lie, and

use it to justify hastily shutting down a company with $40 million cash on hand?

They needed a scapegoat. Badly.

11. A few months earlier, in early April 2023, IRL co-founder (and

plaintiff) Abraham Shafi was still CEO of IRL, and IRL co-founder (and plaintiff)

Krutal Desai was still President of IRL. Since August 2022, the Company had been

fully cooperating with an investigation by the Securities and Exchange Commission

(SEC) that appears to have been started by former employees raising questions about

the accuracy of IRL’s user metrics. (The lead “whistleblower” first tried to extort

millions of dollars from IRL in exchange for not going to the authorities—an offer

IRL, with nothing to hide, rightly rejected.) It was this SEC investigation that led the

Company to hire Faegre (and Celerity), resulting in the initial January 2023 report

to the Board casting doubt on the idea that there were significant bot problems on

the platform and the April 2023 Celerity report further substantiating that conclusion

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(as well as the VP of Engineering’s similar reports to the Board). The Company was

confident, including as a result of these myriad investigations, that there was no bot

problem, and that the SEC would ultimately agree.

12. In April 2023, though, it was Chi-Hua Chien’s and Serena Dayal’s turn

to be deposed by the SEC. That’s when things went off the rails, quickly.

13. After they were deposed, Chien and Dayal confronted CEO Abraham

Shafi about his practice of using the same credit card to charge business and personal

expenses. Shafi has never hidden this practice, which dated back to when he founded

the Company and was personally funding it. In fact, he had been working with the

Company’s recently hired CFO to set up better processes for dealing with his

dual-use credit card (which Shafi, not the Company, was personally liable for).

Chien, with Dayal’s and Maples’s support, demanded that Shafi immediately resign

or else the Company would suspend him and put out a damaging press release about

him.

14. At no time during this discussion did Chien (or Dayal or Maples) ever

mention to Shafi (or to IRL President and fellow board member Desai) any supposed

“bot” problem at the Company. In fact, they did not mention “bots” to Shafi or Desai

until nearly two months later, when they quickly moved to dissolve the Company on

the basis of the hastily concocted Keystone Report. Chien’s only basis for insisting

that Shafi resign immediately was the personal expense issue.

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 15. Shafi refused to resign because he had done nothing wrong, so the VC

Directors followed through with their threat, purporting to suspend Shafi on April

28, 2023. They also kept their threat to smear Shafi, reaching out (or directing a

“spokesperson” to reach out) to reporters to blame the suspension on a “pattern of

misconduct”—a vague description plainly intended to link Shafi’s suspension to the

bot rumors that had already been reported on. Of course, the VC Directors knew that

the Company’s own internal investigations had disproved the bot rumors, and they

had not yet hired Keystone to gin up a false report they could “rely” on, so they

apparently were careful to avoid directly confirming the false bot rumors. At this

point, they could only smear Shafi with innuendo. But their efforts succeeded, as

multiple news reports linked Shafi’s suspension to the false bot rumors.

16. Immediately after suspending Shafi, the VC Directors purported to

install defendant Scott Kauffman as the Company’s new CEO. They did this in

violation of IRL’s bylaws, without a full Board vote. The full Board, with half the

votes controlled by cofounders Shafi and Desai, would never have approved

appointing Kauffman, who had zero experience in social media companies. But

though Kauffman lacked the experience needed to run IRL, he had one characteristic

critical to the VC Directors: he was a longtime loyal ally of Chi-Hua Chien.

17. Kauffman’s tenure as CEO was immediately a disaster. Whether it was

the VC Directors’ intent at this point or not, IRL’s employees interpreted the

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appointment of someone with no relevant experience other than longstanding ties to

Chien as a sign that the Company’s venture capital owners were moving to shut

down the Company. Morale plummeted. Then, in early May 2023, IRL’s platform

suffered a series of technical outages, including an outage that kept the platform

offline for 24 hours. Technical problems are commonplace in the tech world,

especially at fast-growing startups, but up until April 2023, IRL’s dedicated

engineers had been motivated to work around the clock to fix any such issues before

they led to lengthy outages and massive user discontent. In May 2023, though, it

appeared that the VC owners who were now single-handedly calling the shots with

their hand-picked CEO were steering the Company to a shutdown, so the engineers

were no longer motivated to work around the clock to fix problems. Even worse,

when they did finally fix the problems and get the platform back online, Kauffman

made no attempt to try to convince IRL’s users to return to the platform, failing to

implement a strategic outreach plan proposed by IRL’s senior employees. The VC

Directors’ hand-picked CEO left IRL for dead by mid-May 2023, just weeks into his

tenure.

18. At this point, the VC Directors were looking at the very real possibility

that they would be personally blamed for having run a billion-dollar company into

the ground in a matter of weeks. Who else was there to blame? They had suspended

Shafi and installed Kauffman, destroyed company morale in the process, suffered

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the worst technical outages in company history (thanks to the de-motivated

engineering team), lost the vast majority of IRL’s active users as a result (with angry

messages lighting up message boards), and completely failed to implement any kind

of plan to re-engage the user base. That storyline would not be good for any of their

reputations in the startup or venture capital communities, and it would come at a

terrible time for Chien in particular, who was trying to close a billion-dollar

fundraise.

19. So the VC Directors got to work creating an alternative, false storyline.

They secretly commissioned the rushed Keystone Report, and as soon as they had it

in hand, they made the false public “admission” that the Company had never had a

real user base. That admission falsely cast Shafi as the villain while exonerating the

VC Directors from any responsibility for the disastrous collapse of the Company

after they removed Shafi and installed Kauffman. After all, if the Company never

had a real user base, then they could pretend there never was any real “value” that

the four of them had destroyed. And they could position themselves—again,

falsely—as the victims of a sophisticated fraud, rather than the venture capitalists

who drove a billion-dollar company off a cliff in just a few short weeks.

20. The VC Directors were acting not to benefit the Company, but to try to

protect their own personal reputations and financial interests, and those of their

9
employers (and co-defendants here). Never was that more clear than in the final act

of their scheme.

21. The VC Directors disclosed the results of the Keystone Report to Shafi

and Desai on June 20, and almost immediately called a special meeting of the Board

for June 23, to put forward a resolution to dissolve the Company. Shafi and Desai

both begged the VC Directors to slow down and reminded them of the results of the

Faegre investigation and the multiple reports from the Company’s VP of

Engineering, all of which contradicted the supposed conclusions of the rushed

Keystone Report. The VC Directors and Kauffman had no interest in listening; they

instead summarily kicked Shafi off the Board, installed Kauffman in his place, and

excluded Shafi from the June 23 board meeting, all in violation of company bylaws

and their fiduciary duties. The newly reconstituted Board then promptly voted to

dissolve the Company, with the VC Directors explaining to a bewildered Desai that

they had to move quickly because they had heard Shafi was going to talk to the press.

22. That last admission gave away the game. Even if Shafi was preparing

to talk to the press (he wasn’t), it is laughable to suggest that shutting down the

Company to “get the jump” on potential bad press could ever be good for the

Company and all its shareholders, common and preferred. Directors and officers

acting loyally and in good faith would at the very least have taken the time to try to

reconcile the shocking “findings” of the rushed Keystone Report with the completely

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contradictory findings of so many other sources, including Celerity’s four-month

analysis, the VP of Engineering’s multiple reports, the Goodwater survey from 2021,

and the Google Metrics authentication data.

23. The only people who benefited from the VC Directors’ rush to shut

down the Company without any further analysis were the VC Directors. They were

the ones worried about being criticized by Shafi in the press; it was their reputations,

not the Company’s, that they acted to protect. After all, by shutting down the

Company and putting out a press release falsely claiming the Company’s user base

had been a sham, they were doing far more damage to the Company and its

reputation than Shafi ever could (or would). But if they instead had kept the

Company operating, and actually implemented the plans proposed to recover the

Company’s user base, that would have proven that the “95% bots” claim was false.

24. IRL was just one of many companies in each of their funds’ portfolios,

so they chose to cut their monetary losses, torch Shafi, do their best to bury the truth,

and take the Company’s remaining value largely for themselves. They did this to

protect what to them was a far more valuable asset than a single investment: their

reputations in the venture capital and startup communities.

25. The VC Directors breached their fiduciary duties of loyalty and good

faith to the Company in numerous ways throughout this sorry episode. These

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breaches of duty—in many cases also constituting breaches of company bylaws—

included:

• Removing Shafi as CEO;

• Failing to make Krutal Desai, the Company’s President at the time,

CEO after they removed Shafi;

• Installing Kauffman as CEO without a full board vote (predictably

resulting in his disastrous tenure);

• Putting out statements falsely smearing Shafi, culminating in the false

“95% bots” statement that also falsely smeared the Company;

• Removing Desai as President and replacing him with Kauffman

without a full Board vote;

• Directing the removal of Shafi from the Board and the installation of

Kauffman in his place; and

• Dissolving the Company on one days’ notice, without making any

effort to address the enormous discrepancies between the Keystone

Report and the mountain of contrary evidence, so they could make the

press narrative as favorable to their personal reputations as possible

under the circumstances.

26. Kauffman breached his duties of care, loyalty, and good faith to the

Company and its shareholders in numerous ways, including his complete failure to

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undertake any efforts to re-engage IRL’s user base after the May 2023 outages, his

participation in the dissemination of statements falsely smearing Shafi and falsely

“admitting” that the Company’s user base was 95% bots, and his improper removal

of Shafi from the Board and appointment of himself in Shafi’s place (which

Kauffman purported to do via a proxy authority that he did not have).

27. The VC Fund Defendants2 are all vicariously liable for the misconduct

by their agents Chien, Dayal and Maples, who were acting in the scope of their

employment by the VC Fund Defendants throughout the relevant period. The VC

Directors engaged in the wrongful acts described here both for their own personal

reputational benefit, as well as for the benefit of their employers and principals, the

VC Fund Defendants, who aided and abetted their misconduct.

28. In the end, Defendants’ misconduct cost Plaintiffs and their fellow

shareholders dearly. Defendants destroyed all the value of what had been a

$1.2-billion-dollar company, as well as Abraham Shafi’s personal reputation.

Plaintiffs seek to hold Defendants accountable for that destruction through an award

of damages.

29. Plaintiffs partnered with Chien, Maples, and Dayal in good faith,

sincerely believing that these experienced venture capitalists would not only bring

2
The “VC Fund Defendants” are Goodwater Capital LLC, Goodwater Capital III, L.P., SB
Investment Advisers (US) Inc., and Floodgate Fund V, L.P.

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money to the table to support IRL’s growth, but also help guide the Company

through whatever challenges came its way. After all, that’s how these venture

capitalists promote themselves to the founders of startups they wish to invest in.

Sadly, though, these venture capitalists chose instead to brazenly prioritize their own

reputations and financial interests, hastily shutting down a company with years’

worth of capital left, along with a talented and dedicated group of employees and a

once-loyal user base. Plaintiffs bring this suit to vindicate not only their own

interests, but the interests of the family members and other early investors who

believed in them, and the employees who poured blood, sweat, and tears into IRL

for years, only to have the Company burned to the ground in the end by selfish,

scared venture capitalists.

PARTIES

30. Plaintiffs Abraham Shafi, Krutal Desai, and Genrikh “Henry”

Khachatryan co-founded IRL in 2016.

31. Plaintiff Shafi served as IRL’s Chief Executive Officer from its

founding until April 2023. He was also a member of IRL’s Board of Directors from

its founding until he was purportedly removed as a director by an unauthorized and

improper proxy vote on June 23, 2023. Shafi is the holder of 2,668,512 shares of

common stock of the Company.

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 32. Plaintiff Desai served as IRL’s President from its founding until late

May 2023, when he was purportedly (and improperly) removed from the position by

the VC Directors. He has been a member of IRL’s Board of Directors since its

founding and remains on the Board today. Desai is the holder of 2,668,512 shares of

common stock of the Company.

33. Plaintiff Genrikh “Henry” Khachatryan served as a senior engineer at

IRL from its founding until June 2023. Khachatryan is the holder of 2,668,512 shares

of common stock of the Company.

34. Defendant Chi-Hua Chien is a co-founder and managing partner of

Goodwater Capital, LLC. Chien has been a member of IRL’s Board of Directors

since 2021.

35. Defendant Serena Dayal is an Investment Director at SB Investment

Advisers (US) Inc., an affiliate of SoftBank Group. Dayal has been a member of

IRL’s Board of Directors since 2021.

36. Defendant Mike Maples, Jr. is a co-founding partner at Floodgate Fund.

Maples was a member of IRL’s Board of Directors at all relevant times.

37. Defendant Scott Kauffman is the putative CEO of IRL, purportedly (but

improperly) appointed by certain of the Directors of IRL in April 2023.

38. Defendant SB Investment Advisers (US) Inc., also known as SoftBank

Investment Advisers (“SoftBank” or “SoftBank Advisers”), is a Delaware

15
corporation. SoftBank Advisers was the investment manager for SoftBank Vision

Fund 2 at the time of IRL’s Series C fundraising and acted on behalf of SoftBank

Vision Fund 2 in managing its investment in IRL. SoftBank Advisers is a subsidiary

of non-party SoftBank Group Corp.

39. Defendant Goodwater Capital, LLC is a Delaware limited liability

company.

40. Defendant Goodwater Capital III, L.P. (together with Goodwater

Capital, LLC, “Goodwater”) is a Delaware limited partnership, founded in 2018,

which invested in IRL’s Series C fundraising.

41. Defendant Floodgate Fund V, L.P. (“Floodgate”) is a Delaware limited

partnership, formed in 2014, which invested in IRL’s Series C fundraising.

SUBJECT MATTER AND PERSONAL JURISDICTION

42. This Court has subject matter jurisdiction over Plaintiffs’ breach of

fiduciary duty claims under 10 Del. C. § 341. This Court has subject matter

jurisdiction over Plaintiffs’ other claims pursuant to the equitable clean-up doctrine.

43. This Court has personal jurisdiction over Defendants Chien, Dayal,

Maples, and Kauffman because each of them is, or was during the relevant time, an

officer or director of Get Together Inc., a Delaware corporation.

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 44. This Court has personal jurisdiction over Defendants SB Investment

Advisers (US) Inc.; Goodwater Capital, LLC; Goodwater Capital III, L.P.; and

Floodgate Fund V, L.P. because they are Delaware corporate entities.

FACTUAL ALLEGATIONS

A. IRL Experiences Meteoric Growth as a Social Media Phenomenon.

45. Plaintiffs Shafi, Desai, and Khachatryan co-founded IRL in 2016 with

a vision of creating a social media network focused on helping members form

meaningful connections and communities “in real life.” After raising seed funding

in 2016 on the basis of a prototype for a predecessor application, IRL’s team spent

months building out the IRL platform.

46. IRL took off following its public launch in 2018. By March 2021, IRL

estimated that it had just over three million Daily Active Users (DAUs) and nearly

13 million Monthly Active Users (MAUs).

47. IRL became one of the most downloaded apps on Apple devices in the

U.S., consistently ranking as among the top ten most downloaded social network

apps on iOS as of 2021.

48. Other major players in the social media industry took notice of IRL’s

substantial user base. For example, in 2020 IRL worked with TikTok to promote a

“TikTok Live” event. Jenny Zhu, TikTok’s Head of Integrated Marketing in the

U.S., vouched: “IRL has been an amazing platform for us to engage with more of

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our audience and meet new potential users. The Weeknd Experience: TikTok Live

was our first virtual concert experience and we added the event on IRL to grow

visibility. IRL was seamless to work with and successfully helped us gauge early

interest with 52K RSVPs and 1.1M followers on our profile in the week leading up

to the concert. We see major traffic coming from IRL and are excited to continue

our partnership!”

49. To support its early growth, IRL raised $8 million in a Series A

financing in 2018, and $16 million in a Series B financing in 2019. Goodwater

Capital, led by Chien, was the lead investor in both rounds. Floodgate likewise

invested.

50. In early 2021, IRL sought to raise additional capital in a Series C round.

Chien helped lead the Series C fundraising efforts, recruiting and selling SoftBank

on the investment. SoftBank was the primary investor for the Series C, and its

investment was led by Serena Dayal. After learning about the investment

opportunity in IRL, SoftBank’s Chief Executive Officer Masayoshi Son wanted to

meet within 48 hours and offered a $500 million investment. Shafi suggested $100

million, and Dayal compromised with $150 million, which SoftBank subsequently

invested.

51. In March 2021, as part of its efforts to help IRL raise its Series C,

Goodwater Capital commissioned an independent consumer survey to validate the

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size of IRL’s user base. Conducted by an external firm on a sample population of

over 700 U.S. adults ranging from 18 to 30 years old, the survey showed that

approximately 12% of respondents had heard of IRL and 7.4% were active users. In

a presentation summarizing the survey results, Goodwater noted that “[t]he 7.4%

overall of the 18-30 population who have used the app is in line with the company’s

reported 10% active rate amongst that same US audience.”

52. Of the 59 survey respondents who used IRL, 83% used the app at least

monthly and nearly 90% had at least two friends who were also users of the app.

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 53. On April 16, 2021, the news site The Information reported that “[g]roup

messaging app IRL is in talks to raise more than $50 million at a $1 billion

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valuation.” The article placed the investment in line with recent trends: “The funding

for IRL, which has caught on quickly in recent months among teenagers in the U.S.,

follows a resurgence in competitive deals for social media startups like Clubhouse

and photo-sharing app Dispo.” The article also noted that “IRL’s mobile app has

been downloaded more than 12 million times, according to research firm Apptopia.”

54. As part of its due diligence process, SoftBank’s investment team vetted

IRL’s usage statistics. In email correspondence with Shafi, a member of SoftBank’s

team noted that another third-party research firm, App Annie, showed 9 million

cumulative downloads for the IRL app since its launch. In response, Shafi noted that

App Annie did not track users who accessed IRL on the web (rather than by

downloading the IRL app to their smartphone) and that IRL’s user base included

many users under age 18, whose data may not be reliably tracked due to privacy

reasons. SoftBank’s representative responded, copying Dayal, “agree with you on

the data discrepancies w/ App Annie, they highlighted the issue with tracking users

under 18 y/o and understand that it is their best estimate. Thanks for sharing this,

makes complete sense!”

55. In May 2021, IRL closed the Series C investment round. In total,

including the $150 million investment from SoftBank, IRL raised $170 million at a

pre-money valuation of $1 billion and post-money valuation of $1.17 billion.

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 56. Following the Series C, IRL’s Board of Directors had six members.

Under IRL’s Amended and Restated Certificate of Incorporation, three of the board

seats were allocated to directors elected by the common stockholders, who were

IRL’s founders (including Shafi) and original early investors. The other three board

seats were controlled, one apiece, by the three largest venture capital investors:

SoftBank, Goodwater, and Floodgate. SoftBank appointed Dayal, Goodwater

appointed Chien, and Floodgate appointed Maples. Per the Certificate of

Incorporation, to ensure parity in company oversight by the common stockholders

and venture capital firms, if there were ever fewer than three common stockholder

directors, those common stockholder directors would nonetheless together have

three votes on the Board (i.e., if there were only two common stockholder directors,

then each of them would have 1.5 votes). There were only two common stockholder

directors following the Series C, Shafi and Desai.

57. After completing the Series C, IRL began hiring top executives with

experience at other successful startups. In November 2021, IRL hired Alex Strand

as its Vice President of Engineering. Strand had previously served as Director of

Engineering at Snapchat, and before that had worked in software development at

Amazon. IRL also hired an experienced CFO, Gabi Loeb, a Harvard Business

School graduate with years of experience at Disney, among other qualifications.

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 58. IRL’s rapid growth continued in 2021. By September, IRL reported

ongoing user growth to the Board, with approximately 3.8 million Daily Active

Users and approximately 14 million Monthly Active Users.

59. IRL’s streak of cutting-edge innovation continued, as well. IRL’s

engineers developed a new feature—known as “Memix”—that allowed users to

quickly and easily create memes to share on social media. After originally starting

as a feature within IRL, IRL’s leadership realized its potential as a standalone

product.

60. In December 2022, IRL launched Memix as a standalone app on the

Apple App Store. On the day of its launch, Memix became the #1 most downloaded

app on the App Store in the U.S., and then remained at the top of the chart of most

downloaded apps in the U.S. over the coming days.

61. Memix made headlines. On December 21, 2022, Mashable India

published an article titled “This Crazy App Turns Text Into Memes; Ranks #1 On

App Store.”3 The article reported that “Memix is the first new app to seriously

disrupt the chat space in more than ten years and was created by the same team

behind the social messaging platform IRL.” Hollywood Unlocked subsequently

reported that “on Memix, a new breed of meme-making apps that uses the power of

3
Praneeth Palli, This Crazy App Turns Text Into Memes; Ranks #1 On App Store,
MASHABLE INDIA (Dec. 12, 2022).

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generative AI to create and share personalized GIF memes, this otherwise hours-long

process [of making memes] takes just seconds.”4

62. IRL’s leadership team saw huge potential—and value—in Memix. The

closest comparison was Giphy, an animated gif search engine, which Facebook had

acquired in a 2020 deal reportedly worth approximately $400 million.

B. Financial Markets Stumble in 2022, Putting Pressure on Venture Capital

Firms.

63. In early 2022, the tide went out in the financial markets. After hitting

an all-time high on January 3, 2022, the S&P 500 stock index dropped more than

20% to enter a bear market. So did the NASDAQ index, plummeting over 33%.

64. Many investments made at or near the peak had lost substantial value

by mid-2022. After famously offering to acquire Twitter for $54.20 per share in

April 2022, Elon Musk tried to back out of the deal over the ensuing months,

claiming that Twitter’s user base was dominated by bots. Musk’s highly-publicized

claims that Twitter’s users statistics were inflated by fake bot activity created a

playbook for investors seeking to extract themselves from social media investments

they may have come to regret.

4
How This App is Reinventing Pop Culture with Internet Culture, HOLLYWOOD
UNLOCKED (May 2, 2023).

24
 65. SoftBank in particular incurred stunning losses and reputational

damage in 2022. On May 12, 2022, the New York Times reported that “SoftBank’s

Funds Post $27 Billion Loss on Plunging Tech Investments.”5 The bleeding and

reputational injury did not end there. In August 2022, SoftBank reported a $23

billion loss. According to the New York Times, Masayoshi Son told investors that

“we’ve been making big swings but couldn’t hit the ball.”6

66. On August 23, 2022, a Bloomberg headline proclaimed that

“SoftBank’s Epic Losses Reveal Masayoshi Son’s Broken Business Model,” with a

corresponding article stating that Masayoshi Son “was famous chiefly for having

lost more money than anyone in history” and asserting that “[t]he bubble that the

tech investor blamed for his company’s $23 billion loss last quarter—after an

additional $19 billion earlier this year—is one that he helped create.”7

67. In November 2022, the sudden bankruptcy of cryptocurrency exchange

FTX piled more embarrassment onto SoftBank. After investing $100 million into

FTX just ten months earlier, SoftBank reportedly lost the entirety of its investment.

5
Paul Mozur, SoftBank’s Funds Post $27 Billion Loss on Plunging Tech Investments, THE
NEW YORK TIMES (May 12, 2022).
6
Ben Dooley, SoftBank Reports $23 Billion Loss as Tech Investments Plummet, THE NEW
YORK TIMES (Aug. 8, 2022).
7
Max Chafkin, SoftBank’s Losses Reveal Masayoshi Son’s Broken Business Model,
BLOOMBERG (Aug. 23, 2022).

25
 68. The painful exposure of SoftBank’s poor investment record created a

strong reputational incentive for SoftBank’s employees to avoid any further

embarrassment.

C. When Called Into Question, Multiple Investigations Confirm IRL’s User

Statistics.

69. Amidst the market turmoil in 2022, certain IRL employees made

allegations that IRL’s user base disproportionately consisted of bots—including an

IRL employee who threatened to take his allegations about bots to the press and

authorities unless IRL paid him millions of dollars in severance. IRL refused to pay

the extortion demand.

70. In May 2022, the technology news site The Information published an

article titled “SoftBank-Backed Messaging App IRL Says It Has 20 Million Users.

Some Employees Have Doubts About That.” The article reported that, “[i]n

conversations with the press and IRL’s investors, CEO and co-founder Abraham

Shafi said the app has 20 million or so monthly active users.” It then stated that

“inside the company, some employees recently expressed concern to managers about

the usage figures the company has touted.” The article further stated that “two people

with direct knowledge of the situation” had “told The Information they felt the

company may have used an unconventional definition to make the app appear bigger

than it is.”

26
 71. Subsequently, in August 2022, the SEC issued a subpoena to IRL

seeking information concerning IRL’s user statistics.

72. IRL hired outside counsel to respond to the SEC’s inquiry. IRL initially

hired counsel from Cooley LLP (“Cooley”), which had represented IRL in the Series

C fundraising, and then Faegre Drinker Biddle & Reath LLP (“Faegre”) when Chien

and Maples wanted to move away from Cooley. IRL also hired Jina Choi of

Morrison & Foerster LLP for additional advice and guidance. Faegre, which was

leading the internal investigation, in turn retained an independent technology

consulting firm, Celerity, which spent approximately four months investigating and

analyzing aspects of the bot allegations with the full cooperation of IRL’s

engineering team. Based on its own investigative work, Faegre determined that

concerns about a significant problem with bots on IRL’s app were unfounded. In

January 2023, Faegre reported the initial results of its own analysis to IRL’s Board,

indicating no significant problem with bots on IRL. By April 2023, Celerity’s

analysis had confirmed Faegre’s initial assessment, leading Faegre to conclude that

the apparent source of IRL employees’ concerns—a “bot score” promulgated by the

third-party site “CloudFlare”—was misguided and highly inaccurate.

73. IRL also commissioned Strand, its Vice President of Engineering

recently hired from Snapchat, to investigate the allegations. Strand gave a report to

IRL’s Board in late 2022 confirming that the Company had not been deluged by

27
bots, nor was the Company sitting back and letting bots inflate its user metrics. To

the contrary, as Strand explained to the Board, the Company had invested substantial

resources into uncovering and kicking bots off the platform and had proactively

removed approximately three million bots from IRL in 2022 as part of an effort to

ensure the integrity of its user statistics.

74. Because bots commonly appear on all major websites and social media

platforms, degrading the experience of actual human users, IRL had a team of

employees—the Trust and Safety Team—that was specifically tasked with

identifying and eradicating bots. In fact, IRL had a long record of identifying and

removing bots. As early as 2019, IRL implemented third-party software to help

identify and remove automated “bots” or fake users. IRL used ZeroBounce to

validate email addresses upon user sign up. It used Hive to scan links, images, and

videos for malicious content, such as links placed by bots. It used the

“CommunitySift” product from 2Hat to scan text messages for indications of

automated text created by bots. And it used SiftScience to expunge bots from the

platform through pattern-recognition of automated behavior.

75. By January 2022, IRL’s engineering team had discovered

approximately 800,000 fake users on its platform that had signed up with disposable

email accounts. These users were eliminated, and new protections put in place to

identify and prevent user sign ups with disposable email accounts.

28
 76. In February 2023, Strand again reported to IRL’s Board that IRL did

not have a significant bot problem. Strand also reassured IRL employees, including

in an “all hands” meeting for members of IRL’s engineering team, that certain

employees’ concerns about an outsize presence of bots on IRL were unfounded.

D. To Protect Their Reputations, the VC Directors Begin to Scapegoat Shafi.

77. Notwithstanding IRL’s thorough investigations debunking the

purported “whistleblower” claims about bots, Chien, Dayal, and Maples began

taking steps no later than April 2023 to distance themselves from the Company and

put their own financial interests—and professional reputations—ahead of the

interests of the Company and IRL stockholders. They each had strong incentives to

protect their personal reputations as investors, business leaders, and valuable

coaches to start-up founders.

78. Dayal had strong incentives to prevent SoftBank from facing criticism

for mishandling yet another major investment after all the negative publicity it had

experienced in 2022 and early 2023. Moreover, by early 2023, Dayal was making a

name for herself in the venture capital industry. On February 7, 2023, Entrepreneur

magazine ran a feature article on Dayal with the headline “This South Asian Female

Investor Is Disrupting the Male-Dominated World Of Venture Capital.” 8 The article

8
Ajay Choudhury, This South Asian Female Investor Is Disrupting the Male-Dominated
World Of Venture Capital, ENTREPRENEUR (Feb. 7, 2023).

29
praised Dayal as “a venture capital visionary” who “sits on the board of several

notable unicorn start-ups.” The article put a spotlight on Dayal’s involvement with

IRL, reporting that “Serena has invested in several game changing tech innovators,

including: . . . IRL (In Real Life), a rising social platform fostering connections ‘in

real life’ and identifying virtual and in-person events through which like-minded

people can connect.” Given her burgeoning investing career and the public scrutiny

on her investment and leadership at IRL, Dayal had strong reputational incentives to

distance herself from any poor publicity associated with IRL and to avoid blame for

any problems with SoftBank’s investment in IRL.

79. Chien also had strong incentives to protect himself and his venture

capital firm, Goodwater Capital, from criticism for any problems at IRL. In early

2023 (and possibly earlier), Chien and Goodwater Capital were actively raising a

new venture capital fund. To ensure Goodwater could attract new capital from

investors in a difficult funding environment, Chien was motivated to protect his and

Goodwater’s reputations as savvy investors and business partners.

80. Chien, like Dayal, had publicly highlighted his deep involvement with

IRL. He heavily promoted IRL on Twitter as “the next great social platform” and

lauded Shafi as a “brilliant and empathetic entrepreneur.”

30
 81. Maples similarly had a reputation to protect in the industry. As a

prominent venture capital investor, publicly featured on the Forbes “Midas List” and

named one of “8 Rising Stars” by FORTUNE Magazine, Maples was financially

incentivized to protect his reputation as an investor and business partner from harm

and criticism for mismanaging Floodgate’s investment in IRL.

82. As representatives of their venture capital firms on IRL’s Board, Chien,

Dayal, and Maples were dual fiduciaries. Each of them held fiduciary duties not only

to IRL, but also to their respective venture capital funds: Chien to Goodwater, Dayal

to SoftBank, and Maples to Floodgate.

83. The interests of SoftBank, Goodwater, and Floodgate were not the same

as the interests of IRL or its common stockholders. For one, SoftBank, Goodwater,

and Floodgate held (and hold) preferred stock in IRL, which differentiates their

rights from those of common stockholders with respect to the Company’s assets.

31
Importantly, in a liquidation event where IRL’s funds would be distributed, preferred

stockholders hold preferential rights, entitling them to receive proceeds before

common stockholders. As such, the interests of IRL’s preferred and common

stockholders were not and are not aligned with respect to any decision to pursue a

transaction that would result in funds being distributed to the preferred stockholders

and result in lesser or no consideration for the common stockholders. In a

liquidation, the preferred stockholders would recover more than $170 million in

proceeds before the common stockholders could get a penny.

84. As venture capital firms, SoftBank, Goodwater, and Floodgate also

operate under a business model that causes them to seek outsized returns from a

small subset of the investments they make, while expecting many of their

investments to fail or generate insignificant returns. Because of the nature of this

business model, venture capital firms are incentivized to liquidate even profitable

ventures that fall short of their desired returns, particularly when those ventures

would require extended investments of time and resources that could be devoted to

more promising ventures. IRL was just one of dozens of companies that SoftBank,

Goodwater, and Floodgate invested in, and it took substantial time and resources

from each of them, including in the form of attending board meetings and monitoring

the Company’s performance.

32
 85. On January 25, 2023, IRL’s Board appointed a Special Committee—

consisting exclusively of Chien, Dayal, and Maples—to “oversee the Company’s

response to the SEC investigation, to conduct any investigation into the Allegations

that the Special Committee shall deem necessary, and to fulfill the Board’s oversight

responsibilities with respect to the Allegations.”

86. Shafi and Desai both voted in favor of forming the Special Committee

based in part on the fact that the resolution creating the Special Committee did not

transfer substantial governance authority to the Special Committee—let alone the

unilateral authority to remove officers, appoint new officers, or control IRL’s

strategic direction. Indeed, just two weeks before the Board appointed the Special

Committee, the VC Directors had reiterated their confidence in Shafi as CEO.

87. The resolution specifically limited the Special Committee to

investigating allegations that the SEC might make in the future: “should the SEC

make allegations of wrongdoing against the Company or the Company’s

management.” The SEC had not made any allegations of wrongdoing, or misconduct

of any kind, at IRL.

88. The Special Committee engaged Jina Choi, of Morrison & Foerster, as

its counsel despite her previous representation of IRL. Having previously

represented IRL in connection with the SEC investigation, Choi was conflicted when

the Special Committee sought to engage her to switch to representing the Special

33
Committee. On information and belief, Choi sought to have IRL sign a contract

purporting to waive Choi’s conflict, and IRL declined given Choi’s previous

representation of the Company. On information and belief, Chien purported to sign

the conflict waiver on behalf of IRL so that Choi could represent the Special

Committee.

89. In mid- and late April 2023, both Chien and Dayal gave testimony to

the SEC in response to subpoenas the SEC sent them. Following their depositions,

both Chien and Dayal tried to distance themselves from the SEC investigation and

any possible association with its subject matter by publicly scapegoating Shafi.

90. Two days after Chien’s SEC deposition, Chien demanded that Shafi

immediately resign as IRL’s CEO or be suspended with a damaging press release by

the Company. Chien told Shafi that he had to decide on the spot, refusing to give

him time to call the lawyer who had been representing him in the SEC investigation.

Chien ultimately relented, allowing Shafi only fifteen minutes to attempt to reach

his lawyer. Shafi was not able to reach his lawyer in that artificially abbreviated

window, but he still declined to resign, because he had done nothing wrong.

91. Chien followed through with his threat. On April 28, 2023, the Special

Committee unilaterally informed Shafi that he was “suspended” from his role as

IRL’s CEO. The stated reason for the suspension was not that there was any

evidence, or even reasonable suspicion, that IRL’s user statistics were inflated. There

34
was no such evidence, and Chien did not even mention that issue to Shafi. Instead,

Chien told Shafi that he was being suspended because he had improperly placed

personal expenses on a credit card paid by IRL, even though Shafi had done so for

years—reimbursing the Company in full—with the full knowledge of IRL’s recently

hired CFO.

92. Why would Shafi use the same credit card for corporate and personal

expenses? Because in the early days of the Company, Shafi was self-funding the

Company’s operations, so it was all the same to him. When Shafi explained the

practice to IRL’s newly-hired CFO in the summer of 2021, Gabi Loeb, Loeb did not

tell him to stop the practice. Rather, Loeb worked with Shafi to create better

processes around the practice, to ensure the expenses were properly broken out and

the Company was quickly reimbursed by Shafi for his personal expenses on the card.

Moreover, the credit card at issue was in Shafi’s own name, on Shafi’s credit, and

was Shafi’s liability if unpaid. Indeed, when IRL left the card unpaid after IRL was

dissolved, Shafi had to cover the Company’s expenses on the card from his personal

funds.

93. This “suspension” of Shafi was, in all practical respects, a complete

termination. The Special Committee cut off Shafi’s access to IRL email and

electronic files and instructed employees to no longer engage with him as CEO.

35
 94. The VC Directors’ true reason for suspending Shafi was not concerns

over his process for reimbursing personal expenses, but rather to scapegoat Shafi

and thereby insulate the VC Directors (and their employers) from any possible

reputational hit or consequence from the SEC investigation.

95. This became clear when the VC Directors, on information and belief,

either themselves or through an agent at the Company, immediately contacted The

Information to publish an article about Shafi’s suspension.

96. On the same day that Chien informed Shafi of his suspension as CEO,

April 28, 2023, The Information published an “exclusive” article with the headline:

“IRL’s CEO Steps Down After Allegation of Inflated User Numbers.” The article

reported that “Abraham Shafi has stepped down as CEO of messaging app IRL

following allegations that the company used bots to inflate the users it reported

publicly and to investors, according to a person with direct knowledge.”

36
Of course, even though Chien had pressured Shafi to “step down”—and perhaps had

gone into the conversation assuming Shafi would do so—Shafi had refused. So the

mysteriously planted article was plainly wrong. On information and belief, only the

three VC Directors knew Chien gave Shafi the option to step down rather than be

suspended.

97. Then, on April 30, 2023, The Information published an article with the

headline “IRL Suspended CEO Shafi After Reported Pattern of Misconduct; Acting

CEO Named.” The article reported: “A special committee of messaging app IRL’s

board of directors suspended CEO Abraham Shafi on Friday after receiving a report

from outside counsel that outlined a pattern of misconduct by Shafi, an IRL

spokesperson told The Information.” The article’s author, Mark Matousek, posted a

similar statement on Twitter:

37
 98. By publicly announcing that Shafi had been suspended for an

unspecified “pattern of misconduct,” the purported “IRL spokesperson” placed Shafi

in a blatantly false light. Coming out two days after the same reporter at The

Information had published an article claiming that Shafi was stepping down due to

“allegations of inflated user numbers,” the obvious insinuation of the new article’s

“pattern of misconduct” assertion—that Shafi was behind a purported inflation of

IRL’s user statistics—was false, as the VC Directors knew following the multiple

investigations into the issue. As the VC Directors knew, the actual (and only) reason

for Shafi’s suspension—as communicated to Shafi, and separately to Desai—was

that Shafi had improperly placed personal expenses on an IRL credit card.

99. The VC Directors’ conspiratorial acts of suspending Shafi as CEO and

publicly announcing that he had engaged in a “pattern of misconduct” had their

intended effect. After The Information reported on Shafi’s suspension due to a

“pattern of misconduct” following its earlier articles about supposedly inflated user

statistics, the wider media and public proceeded to connect the dots to arrive at the

false conclusion that to the extent there might have been any inflation of user

statistics at IRL, it had been masterminded by Shafi without the VC Directors’

knowledge.

38
 100. For example, on May 1, 2023, WebProNews published an article titled

“IRL Suspends CEO Over ‘a Pattern of Misconduct.’”9 The article expressly linked

Shafi’s suspension with the purported inflation of user statistics, reporting that

“Shafi’s suspension comes after The Information previously reported on allegations

that IRL had used bots to inflate its user numbers.”

101. Commentators on social media likewise concluded that Shafi had left

the CEO role due to the purported “inflated customer numbers.” One commentator

on LinkedIn posted: “IRL founder and CEO Abraham Shafi has left following

allegations of inflated customer numbers ie fraud – claiming 20 million customers,

believed actual customers could [be] as low as 9 million.”

9
IRL Suspends CEO Over ‘a Pattern of Misconduct.’, WEBPRONEWS (May 1, 2023).

39
E. The VC Directors Exceed Their Authority and Violate IRL’s Bylaws by
Appointing Scott Kauffman as CEO.
102. In tandem with suspending Shafi from his role as IRL’s CEO, the VC

Directors exceeded their authority and improperly appointed Defendant Scott

Kauffman as CEO.

103. The Special Committee’s hiring of Kauffman as CEO exceeded the

Special Committee’s authority. The resolution that had created the Special

Committee in January only gave it authority to “oversee the Company’s response to

the SEC investigation, to conduct any investigation into the Allegations that the

Special Committee shall deem necessary, and to fulfill the Board’s oversight

responsibilities with respect to the Allegations.”

104. IRL’s bylaws make clear that, once the Special Committee suspended

Shafi as CEO, only the entire Board of Directors had the authority to replace him.

Section 29(a) of IRL’s bylaws provides: “If the office of any officer becomes vacant

for any reason, the vacancy may be filled by the Board of Directors, or by the Chief

Executive Officer or other officer if so authorized by the Board of Directors.”

105. Moreover, the IRL bylaws include a mandatory provision for just this

circumstance, automatically promoting the Company’s President to become CEO

when the office is “vacant.” Section 29(c) of the IRL bylaws states: “If the office of

Chief Executive Officer is vacant, the President will be the chief executive officer

of the corporation (including for purposes of any reference to Chief Executive

40
Officer in these Bylaws) and will, subject to the control of the Board of Directors,

have general supervision, direction and control of the business and officers of the

corporation.”

106. IRL’s President at that time, April 2023, was Krutal Desai. When the

Special Committee installed Kauffman as CEO, it violated the bylaws that expressly

state that, if the office of the CEO is vacant, the President will become the CEO. The

Special Committee further violated the bylaw providing that the full Board is to fill

any officer vacancy.

107. By exceeding their authority and violating the bylaws to install

Kauffman as CEO, the VC Directors placed their own interests ahead of those of the

Company. Rather than turn to an experienced co-founder of the Company for

leadership (i.e., Desai), or to any other option with social media experience, the VC

Directors turned to an outsider who would best serve their personal and financial

interests in protecting their reputations as investors. Kauffman’s principal

qualification was not his fitness for running a social media startup, but his long and

loyal history with Chien. Kauffman was a longtime ally of Chien, going back more

than twenty years to their work together at the struggling dot com start-up

Coremetrics.

108. On his first call with IRL employees, Kauffman told them he did not

understand the product or the demographic. Indeed, Kauffman had zero experience

41
working at social media companies. His background was in advertising and more

traditional media, including roles at Zinio, an online repository of traditional paper-

based magazines, and MDC Partners, an advertising and marketing agency holding

company.

109. IRL co-founder Krutal Desai complained to Chien about Kauffman’s

hiring and expressed concern about his inexperience with social media startups and

his unfitness to run IRL. Chien ignored Desai’s concerns.

110. In one-on-one meetings that he held with IRL employees, Kauffman

made clear that he was brought in not to help IRL achieve its potential, expand its

user base, or monetize its platform, but to preserve whatever investor capital he

could—for the VC investors. He told individual IRL employees that he had

experience winding down companies and returning value to shareholders. Because

the VC Directors represented the preferred stockholders—which hold a liquidation

preference entitling them to recoup the total amount of their investment plus an 8%

annual dividend amount—Kauffman was acting in their narrow interests by seeking

to preserve capital for distribution to the preferred investors, rather than invest the

Company’s capital for the good of the Company and the common stockholders.

F. Kauffman Fails to Address Site Outages That Drive Users to Abandon

IRL.

111. The VC Directors’ unauthorized installation of Kauffman as CEO

proved disastrous for IRL.

42
 112. Just before Shafi was removed as CEO, IRL suffered two significant

technical incidents, collectively lasting from April 26 to April 28. With IRL’s

engineers working hard to preserve and restore service, though, the site remained

up, and user activity remained relatively unchanged.

113. Shortly after Kauffman’s appointment, IRL’s platforms suffered new

technical outages. This time, though, the now-demoralized engineering team

questioned why they should work overtime for a CEO with no relevant experience,

beholden to VC Directors with no apparent interest in preserving the business.

Things quickly went from bad to worse.

114. On May 6, a serious partial technical outage occurred and was not

resolved for nearly 72 hours. Then, shortly after that issue was resolved on the

morning of May 9, another outage occurred—taking IRL’s entire platform offline

for over 24 hours—in the early afternoon of May 9. That issue took nearly five days

to be fully resolved, until early in the morning on May 14.

115. These outages had a negative effect on IRL’s user population. IRL’s

daily active user population was over 2.18 million users as of May 5, the day before

the first severe outage. By May 7, IRL’s daily active user population had plummeted

to 1.38 million users. The daily active user population kept dropping, until it

rebounded slightly on May 11, at around 1 million users.

43
 116. The site then suffered yet another severe outage incident on May 16,

and then another on May 17, the second of which lasted nearly five days. Active

users kept dropping throughout this period, down to under 50,000 by late May.

117. IRL users expressed frustration and anger in online reviews,

commenting “[i]t keeps crashing” and “this app just keeps breaking.”

44
 118. In IRL’s public chat groups, IRL users openly expressed their

frustration and resulting intent to delete the app:

45
 119. While IRL had often experienced technical issues and outages in its

history as a rapidly growing platform, its engineering team had always managed to

resolve the issues quickly, usually within hours. Motivated by Shafi and the other

IRL founders, IRL’s engineering team had made themselves available 24/7 to jump

on technical issues with a “war room” mentality.

120. Kauffman, by contrast, showed no interest or urgency in addressing the

technical outages. On information and belief, he did not even contact the leaders of

46
IRL’s engineering team to discuss the outages or seek to have them fixed.

Kauffman’s attitude toward IRL’s technical crises further demoralized IRL’s

employees and convinced them that Kauffman was not advancing IRL’s best

interests—that he was not even interested in keeping IRL’s platform functioning.

121. Kauffman’s inexperience and outsider status left IRL without an

effective leader at a critical time. Kauffman had no personal relationships within

IRL, and rather than motivate employees, his presence reinforced employees’

concerns that the lead VC investors were abandoning ship after suspending Shafi.

Indeed, the Company stopped all spending on advertising on May 11 and never

restarted advertising spend or made any other efforts to bring users back.

122. The technical outages were detrimental not only because they lasted

through most of a month, but also because Kauffman failed to take simple steps that

could have mitigated their damage. On information and belief, the Company never

sent an email, text message, or app notification to try to bring users back—or assure

them the problems were being addressed.

123. The need to communicate with IRL’s users during the Company’s

technical crisis was paramount and obvious to anyone attempting to satisfy

consumers with a product offering. By meeting the app’s total shutdown with

silence, Kauffman reinforced users’ doubts about the platform and created an

47
impression that IRL did not care about users and was not even attempting to address

the technical issues.

124. Further, when IRL’s senior employees developed a strategic plan to

re-engage frustrated users after the outages were finally fixed—through text message

and email outreach to users who had deleted the IRL app—Kauffman failed to

implement it.

125. There was no valid reason to leave IRL for dead—at least no valid

reason from the Company’s perspective. IRL had approximately $40 million of cash

on hand, a team of highly talented employees, and a dedicated user base, at least

some substantial portion of which could have easily been re-engaged with the app

through simple outreach. Yet Kauffman caused IRL to completely unravel by failing

to take any action to ensure technical outages were timely addressed or lost users

were re-engaged, confirming employees’ suspicions that he was there to dismantle

the Company and there was no use trying to save it.

G. Desai Tries to Get the Board to Right the Ship, But the VC Directors’
Actions Prompt IRL’s Counsel to Resign.

126. On June 1, 2023, in response to these disasters, Desai called an

emergency Board meeting to try to stop the Company from going off the cliff

completely. In an email to other Board members, he wrote: “I have one issue on the

agenda: I would like to discuss the strategic direction of the company and the

48
company’s best interests in light of the recent decision by the Special Committee

regarding Scott Kaufman as CEO and President.”

127. Following Desai’s email, the Company’s counsel at Cooley resigned

from further representation of IRL, citing the Directors’ disputes about the scope of

the Special Committee’s actions and its authority to take them. A Cooley attorney

wrote to the Board:

As Company counsel, we have been communicating with the members

of the board, as well as the Special Committee and its counsel,
regarding the issues the Special Committee has been handling, based
on our understanding that the Special Committee was convened by and
has been acting under the authority granted to it by the Board.

It now appears, however, that the members of the board may have
disagreements regarding the Special Committee. In particular, as a
result of the email that Krutal sent on Thursday, June 1, we learned that
Krutal has concerns about the scope of authority of the Special
Committee and the actions it has taken. When combined with
Abraham’s objection to his removal as CEO, these concerns appear
to reflect a level of divergence within the Board that now limits our
ability to advise the Company.

Because we represent the Company, and not the Special Committee or

any individual board members, we are only able to act for the Company
when there is consensus within the Board. If the Board is not
speaking with consensus, then we as Company counsel no longer
have a clear authority from which to take direction. Accordingly,
until the Board is able to reach consensus regarding these issues and
provide us with proper direction, we are not in a position to advise the
Company.

128. Cooley’s resignation following the Special Committee’s usurpation of

Board functions was a clear indication that IRL’s corporate governance was broken.

49
 129. Notwithstanding the stunning red flag Cooley waved, the Special

Committee proceeded apace in dismantling IRL. Morrison & Foerster took over

Cooley’s role as Company counsel, thereby simultaneously representing both IRL

and the Special Committee of the Board, and notwithstanding the inherent conflicts

that had led Cooley to resign.

130. At the ensuing Board meeting, which took place over Zoom on June 8,

2023, Desai expressed his belief that IRL had real value and that Kauffman’s

management was threatening it. The VC Directors said they would consider the

feedback. No one mentioned any problem with purported bots on IRL, nor did

anyone suggest that the Company had no value.

131. By June 8, however, the VC Directors’ interests diverged even more

drastically from those of the Company and other stockholders. By improperly

removing Shafi and improperly installing Kauffman as CEO—despite his lack of

any relevant experience for managing a large social media platform—the VC

Directors had badly damaged the Company. While it was not beyond repair—the

Company had $40 million of cash on hand and a talented roster of employees, in

addition to two widely popular apps in IRL and Memix—it would take time and

steady effort to restore IRL’s growth and success.

132. Their actions having substantially harmed the Company, the VC

Directors needed to find a way out that would preserve their reputations in the

50
venture capital and start-up world. On information and belief, shortly after the June

8 Board meeting (or possibly even earlier), the VC Directors decided to gin up a

reason to shut down IRL that would allow them to focus their time and efforts on

other investments, insulate themselves and their venture capital funds from any

reputational hit, and get whatever cash they could out of the Company on account of

their stock preference rights. They apparently decided that publicly (and falsely)

declaring IRL users were almost entirely bots, and thus the Company was

unsustainable (and never really had value in the first place), was their best way out.

H. The VC Directors Conduct a Biased “Investigation” to Justify Smearing

Shafi and Dissolving IRL.

133. On information and belief, in May or early June 2023, shortly after

Celerity completed its report further confirming there was no significant bot problem

at IRL, the VC Directors secretively engaged another outside consulting firm,

Keystone, to yet again investigate the purported bot issue. On information and belief,

Keystone was not asked to perform a neutral analysis of the extent to which bots

were present on IRL’s platform. Instead, Keystone’s assignment was explicitly

biased toward a particular outcome: “to confirm the presence of bots” on IRL. No

individual expert, analyst, or author is identified in the Keystone report, and no

relevant qualifications are stated in the report. (To this day, the VC Directors have

refused to share a copy of the Keystone Report with Shafi.)

51
 134. In sharp contrast with the Celerity engagement that Faegre managed,

which had unfolded over four months, Keystone’s analysis was performed on an

expedited timetable set by the Special Committee. Keystone performed its analysis

over a few rushed weeks. On information and belief, Keystone did not follow any

established methodology for detecting bots on a social media platform, nor did it

have any particular expertise in bot detection.

135. On June 12, 2023, Chien noticed another special meeting of the Board,

for Friday, June 16, over Zoom, “to discuss the conclusion of the Special

Committee’s investigation.” Chien then rescheduled the meeting to the following

Tuesday, June 20, 2023.

136. On June 15, 2023, the VC Directors caused the formation of an entity

named IRL LIQUIDATION, LLC. On information and belief, this entity—whose

name indicated its intended purpose was to handle the dissolution of IRL—was

formed before the Special Committee received the Keystone Report.

137. At the ensuing Board meeting on Tuesday, June 20, 2023, the VC

Directors on the Special Committee revealed for the first time that the reason they

had hired an outside consulting firm, Keystone, was to investigate the purported bot

issue, and that Keystone had concluded that 95% of users on the IRL platform since

mid-2022 were bots. The Special Committee disclosed that the two primary reasons

for this conclusion were (1) the huge user drop following Abraham Shafi’s

52
suspension, and (2) Keystone’s analysis of other indicia of non-human activity, such

as a review of the email addresses associated with IRL users.

138. These reasons for concluding that IRL’s user base consisted of 95%

bots were not credible, for many reasons.

139. First, the drop-off in users following Shafi’s suspension on April 28

was plainly caused by the series of severe and lengthy site outages in May 2023,

exacerbated by Kauffman’s failure to implement any sort of plan to re-engage users

after the outages were fixed. The Special Committee’s briefing at the Board meeting

wrongly stated that there were no user complaints suggesting any problems with the

IRL app after April 28 that would otherwise have explained the drop-off in users,

ignoring both the critical failures throughout May and the large number of user

complaints, as well as evidence of users deleting their accounts (something bots

don’t do).

140. Second, Keystone’s analysis of non-human activity on IRL was

completely unreliable. For one, its conclusions were inconsistent with the multiple

investigations Strand and Faegre/Celerity had conducted in 2022 and 2023.

Keystone’s analysis had also been conducted over a much shorter period than the

Faegre/Celerity investigation. And Keystone’s conclusion was contrary to the 2021

Goodwater survey and the April 2023 Google Metrics authentication data, both of

which independently substantiated widespread human use of IRL.

53
 141. Third, Goodwater’s own employees knew that the Keystone report was

based on faulty data. Keystone’s “95% bot” conclusion relied on an IRL database

called Redshift that was both incomplete and unreliable. Goodwater’s employees

knew that Redshift was unreliable, and expressly acknowledged as much, during

their own investigation into IRL’s usage statistics with collaboration from IRL

employees. The Goodwater employees acknowledged that another IRL database,

Google BigQuery, was the “source of truth” as to user activity on IRL—not Redshift.

When Keystone came to conclusions based on Redshift data, Goodwater employees

thus knew the underlying data was unreliable.

142. On June 22, two days after the June 20 meeting, the VC Directors called

another special meeting of the Board for the following day, June 23, to consider a

resolution to dissolve the Company.

143. In response to the VC Directors’ notice calling a meeting for the next

day to vote on dissolving the Company, Desai expressed concern about the rapid

pace of the Special Committee’s decision-making. On June 22, Desai wrote to the

Board:

In January 2023, Faegre as company counsel reported to the Board that

there had not been a significant problem with bots on the app. Similarly,
the company’s VP of Engineering twice reported to the Board, as
recently as February 2023, that the app did not have a significant bot
problem. That was my understanding up until Tuesday’s Board
meeting, when the Special Committee reported that it has found that up
to 95% of the users on the system were likely non-human/bots between
June 2022 and May 2023, a finding included in the resolution that the

54
 Board is supposed to consider tomorrow morning. I’d appreciate it if
the Special Committee could help me reconcile these different
conclusions. Again, until Tuesday it was my understanding that bots
were not a significant problem on the app.

144. In the same email, Desai highlighted the rushed nature of the Special

Committee’s efforts to shut down the Company. Seeking to protect what he saw as

substantial shareholder value, Desai asked: “Does the Special Committee have an

estimation of the potential net proceeds from a sale of the company, as referenced in

the proposed resolution?”

145. Shafi also promptly raised objections both to the Keystone report’s

conclusions and to the timing of the dissolution vote. In an email to the full Board

on June 22, 2023, Shafi noted that the Special Committee’s newfound claim that

95% of IRL’s users were bots “contradicts significant evidence presented to the

board (and the SEC) in recent months” as well as the analysis conducted by the

Company’s outside counsel and independent experts. In an email sent early the next

day, Shafi also noted that Google Metrics independently showed approximately 17

million unique sign-ins to IRL authenticated by Google in April 2023—further

contradicting the conclusion that 95% of IRL’s were bots.

146. The Special Committee ignored Shafi’s objections.

55
I. The VC Directors and Kauffman Improperly Remove Shafi from IRL’s
Board.
147. Also on June 22, a lawyer from Morrison & Foerster purporting to

represent the Company emailed Desai, Shafi, and Khachatryan (along with one other

Common Stockholder) to request that the four of them sign a Unanimous Written

Consent removing Shafi from the Board and electing Kauffman to the Board in his

place. The email gave the four Common Stockholders just 24 hours to “execute and

return the attached written consent to me, or complete the DocuSign by 8:30 a.m.,

Pacific Time, tomorrow, Friday, June 23, 2023.”

148. Twenty-four hours later, shortly after the arbitrary deadline of 8:30 a.m.

on June 23, 2023, the same lawyer from Morrison & Foerster sent a follow-up email.

The email stated: “All, as the key holders have failed to comply with the request to

execute the stockholder consent in accordance with the terms of the Voting

Agreement within the 24 hour notice period provided for therein has not been

complied with, please see the attached consent executed using the voting proxy.”

Attached to the email was a Unanimous Written Consent signed by Kauffman as a

purported proxy for the Common Stockholders, including Plaintiffs.

149. By purporting to vote on this matter as a proxy for Plaintiffs, Kauffman

exceeded his authority and violated IRL’s Voting Agreement.

56
 150. First, under Section 4.2 of IRL’s Voting Agreement, only the President

and Treasurer of the Company has proxy authority to vote a stockholder’s shares,

and only under certain circumstances.

151. Section 4.2 of the Voting Agreement provides, in relevant part:

Each party to this Agreement hereby constitutes and appoints as the

proxies of the party and hereby grants a power of attorney to the
President and Treasurer of the Company, . . . with full power of
substitution, with respect to the matters set forth herein, including
without limitation, election of persons as members of the Board in
accordance with Section 1 hereto . . . and hereby authorizes each of
them to represent and to vote, if and only if the party (i) fails to vote
or (ii) attempts to vote (whether by proxy, in person or by written
consent), in a manner which is inconsistent with the terms of this
Agreement, all of such party’s Shares in favor of the election of persons
as members of the Board.

152. When Kauffman purported to vote Plaintiffs’ shares in favor of

removing Shafi from the Board and electing himself to the Board in Shafi’s place,

he did so on the basis of his unauthorized status as “President” of IRL. Kauffman

was not a validly authorized President of IRL. While the Special Committee had

purported to appoint Kauffman as President of IRL in late May 2023—making an

announcement of his new status in a Slack message—it had no authority to do so.

Any such appointment of Kauffman by the Special Committee to an officer position

was defective because it was not approved by a majority of the Board, as required

under IRL’s corporate bylaws.

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 153. Regardless of the fact that he was not a properly appointed President of

IRL, Kauffman purported to vote Plaintiffs’ shares in a manner he knew they

opposed.

154. Moreover, even if Kauffman could have had proxy authority to vote

Plaintiffs’ shares upon a failure by them to vote, there was no valid basis or

authorization for Kauffman to vote their shares so quickly. That they had not voted

their shares by 8:30am Pacific Time on June 23, 2023—just 24 hours after they had

first been given notice of the request to vote—did not constitute a failure to vote

sufficient to authorize a proxy to vote on their behalf under the Voting Agreement.

155. Kauffman was also personally conflicted when he voted Plaintiffs’

shares in favor of removing Shafi from the Board and placing himself on the Board.

By hastily using his invalid title of President to vote Plaintiffs’ shares against their

interests—and in favor of his own interests—Kauffman violated his fiduciary duties.

J. The VC Directors Hastily Dissolve IRL and Falsely Proclaim Its Users
Were 95% Bots.

156. The purported removal of Shafi and appointment of Kauffman in his

place on the Board was critical to the last part of the VC Directors’ scheme. Before

that occurred, Shafi and Desai collectively controlled 3 of the 6 Board votes. By

installing himself in Shafi’s place, Kauffman purported to take over Shafi’s 1.5

board votes, meaning the VC Directors plus their hand-picked CEO now purported

to control 4.5 of 6 votes of the full Board, a clear majority.

58
 157. The newly reconstituted IRL Board—consisting of the three VC

Directors, Desai, and Kauffman in place of Shafi—met on June 23, 2023, just

minutes after Kauffman had voted Plaintiffs’ shares to improperly remove Shafi

from the Board.

158. When Shafi attempted to join the meeting to express his concerns, the

Special Committee’s counsel informed him that his “presence at the board meeting

will not be required.”

159. At the meeting, the VC Directors communicated to Desai that they had

to shut down and dissolve the Company right away because they had heard that Abe

was going to talk to the press, and they had to beat him to the punch. The Board

proceeded to vote to dissolve IRL.

160. The VC Directors and Kauffman all voted for dissolution. The only

Common Stockholder on the Board, Krutal Desai, also decided to vote for

dissolution because by June 23, in light of the precipitous decline in users, he saw

no way for the Company to recover under the VC Directors’ and Kauffman’s control,

and he feared retaliation by the VC Directors if he did not vote for dissolution. Desai

made clear that he did not know enough to adopt the Special Committee’s findings

about the number of bots on the platform.

161. The Special Committee (consisting of the VC Directors) also solicited

votes of stockholders on the dissolution of the Company. On information and belief,

59
the Special Committee omitted material information that cast serious doubt on the

Special Committee’s conclusion that 95% of IRL’s users were bots, including the

results of the Faegre investigation, the Celerity Report, the Google authentication

statistics, and the reports from Alex Strand’s investigations.

162. As soon as the Board voted to dissolve IRL, an IRL spokesperson put

out a statement to media affirmatively stating that an investigation by the Board had

concluded 95% of IRL’s users were bots.

163. In a letter to shareholders on June 23, 2023, Kauffman wrote that

outside counsel “hired earlier in the year by the Special Committee of the Board”

had “identified several areas of concern, most notably: Expert analysis showed that

95% of identified users were in fact automated or from bots, not authentic, human

users.”

164. Also on June 23, 2023, The Information published an article reporting

on the IRL spokesperson’s statement with the headline “Social App IRL, Which

Raised $200 Million, Shuts Down After CEO Misconduct Probe.” The article stated:

“Last year, the CEO of messaging app IRL repeatedly said it had 20 million monthly

active users, who chatted about shared interests and planned real-world events

together. Today, a spokesperson for the startup said an investigation by the board of

directors concluded 95% of those users were ‘automated or from bots.’” The article

portrayed Shafi as a wrongdoer: “As a result of the probe, the spokesperson said the

60
company would shut down and return capital to shareholders, two months after it

suspended the founder and CEO, Abraham Shafi, for alleged misconduct.”

165. The story quickly made headlines in numerous publications, with news

outlets reporting that the Company had “admitted” that 95% of its users were fake.

This reporting, coupled with the reporting of Shafi’s suspension for vague

“misconduct,” cemented the false public view that Shafi had defrauded IRL’s

investors while absolving the VC Directors of any responsibility for IRL’s collapse.

166. On June 25, 2023, Fortune ran an article headlined: “A messaging app

startup that raised $200M from SoftBank and others is shutting down because 95%

of its users were fake.”

167. On June 26, 2023, TechCrunch proclaimed: “Unicorn social app IRL

to shut down after admitting 95% of its users were fake.”

168. On June 27, 2023, Hoodline reported “Faux $1.2B Unicorn Admits

95% of Userbase Are Fake Bots.” The article concluded Shafi was at fault: “Last

year, IRL’s authenticity was called into question by employees who doubted CEO

Abraham Shafi’s claims of 20 million monthly active users on the app—a figure that

now appears to be completely misguided, if not outright fraud.”

169. On June 28, 2023, Futurism published an article titled “SOCIAL

MEDIA APP SHUTS DOWN AFTER ADMITTING 95% OF USERS WERE

BOTS.” The article stated that “[f]ollowing a series of reports by The Information,

61
which questioned the app’s advertised number of users, the company’s board of

investors suspended Shafi and launched an investigation, ultimately revealing that

IRL user figures were almost entirely fudged.”

170. At a virtual meeting with IRL employees informing them of IRL’s

dissolution, Kauffman refused to provide basic information about the claim that 95%

of IRL’s users were bots. Multiple IRL employees challenged and questioned the

claim that 95% of users were bots because the conclusion was contradicted and

disproved not only by all the evidence already described, but also by the employees’

own experiences as IRL engineers—attending live and virtual IRL events with

human users, responding to “bug reports” from human users about technical issues

62
on the app, interviewing human users, chatting with human users on the app, and

observing authentic activity in group messaging chats.

171. Notwithstanding the still-pending SEC investigation, IRL (still under

Kauffman’s and the VC Directors’ control) instructed various employees who left

the Company to delete all of the files on their IRL laptops before returning their

laptops to the Company. The Company’s instructions to former IRL software

engineers to delete all files from their laptops could have destroyed relevant

information, including evidence of the reliability of IRL’s user statistics and the

falsity of Defendants’ “95% bots” claim.

K. Goodwater Misappropriates IRL’s Intellectual Property.

172. In the final weeks before IRL was dissolved, Chien and Goodwater

Capital were actively collecting confidential information and proprietary work

product materials from IRL. Chien and multiple other Goodwater employees

solicited confidential memoranda, data, and work product from IRL employees

through a private Slack channel, including information regarding the results of IRL’s

in-depth user research, product plans, and progress developing a cutting-edge feature

for event recommendations based on machine learning from IRL’s existing data sets.

On information and belief, Chien and Goodwater obtained these materials on the

basis of representations that they would use them to work with IRL to develop and

refine a new version of the IRL app that would help resurrect IRL’s user base and

63
bring users back to IRL. However, after IRL’s personnel provided the confidential

and proprietary materials to Goodwater employees, the Goodwater employees went

radio silent and never communicated with IRL about them again. These confidential

and proprietary IRL materials would have substantial value to other Goodwater

portfolio companies, including the companies Fever and The Nudge.

173. One month after hastily dissolving IRL, on July 25, Goodwater Capital

announced the closing of its most recent round of fundraising, totaling more than $1

billion in funds raised.

174. By dissolving IRL, Kauffman and the Special Committee shut down

not only the IRL platform, but also Memix. After Memix had topped the App Store’s

most downloaded chart just six months earlier, IRL (under the control of the VC

Directors and Kauffman) pulled Memix from the market with absolutely no

explanation. Former Memix users expressed public frustration with the

disappearance of their “favorite app.” For example, former Memix users posted the

following messages online:

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 DEMAND FUTILITY

175. Plaintiffs have not made a pre-suit demand on the Company’s Board of

Directors because doing so would be futile. The futility of such a demand is evident

as Chien, Dayal, Maples, and Kauffman are four out of the five directors on IRL’s

Board, controlling 4.5 of 6 votes.

176. Chien received a material personal benefit from his misconduct in the

form of protecting his reputation, and that of Goodwater Capital, from harm. As

alleged above, Chien was motivated to do this by his own personal financial interests

in protecting his ability to raise and deploy venture capital funds. Moreover, Chien

65
was motivated to avoid reputational harm to ensure the success of Goodwater’s

ongoing effort to raise a new $1 billion fund in 2023. Additionally, by dissolving

IRL, Chien was able to decrease the amount of time he and Goodwater dedicate to

the Company and reallocate time to other investments with a potentially shorter

timeframe to a successful liquidation. Chien was also able to position Goodwater, as

a preferred stockholder with a liquidation preference, to recoup millions of dollars

in cash from IRL while leaving nothing to the common stockholders.

177. Dayal received a material personal benefit from her misconduct in the

form of protecting her reputation, and that of SoftBank, from harm. As alleged

above, Dayal was motivated to do this by her own personal financial interests in

protecting her burgeoning reputation as a venture capital investor and, thus, her

future ability to raise and partner as an investor with promising founders. Moreover,

Dayal was motivated to avoid reputational harm for herself and SoftBank in light of

the substantial negative news and press about SoftBank throughout 2022 and early

2023, as alleged above. Additionally, by dissolving IRL, Dayal was able to decrease

the amount of time she and SoftBank dedicate to the Company and reallocate time

to other investments with a potentially shorter timeframe to a successful liquidation.

Dayal was also able to position SoftBank, as a preferred stockholder with a

liquidation preference, to recoup millions of dollars in cash from IRL while leaving

nothing to the common stockholders.

66
 178. Maples received a material personal benefit from his misconduct in the

form of protecting his reputation, and that of Floodgate Fund, from harm. As alleged

above, Maples was motivated to do this by his own personal financial interests in

protecting his reputation as a venture capital investor and, thus, his future ability to

raise funds and convince founders of promising start-up companies to accept his

investment and partnership. Additionally, by dissolving IRL, Maples was able to

decrease the amount of time he and Floodgate dedicate to the Company and

reallocate time to other investments with a potentially shorter timeframe to a

successful liquidation. Maples was also able to position Floodgate, as a preferred

stockholder with a liquidation preference, to recoup millions of dollars in cash from

IRL while leaving nothing to the common stockholders.

179. Kauffman also received material personal benefits in the form of

financial compensation he received for his role at IRL serving the wishes of the VC

Directors. Kauffman is also beholden to the VC Directors. He depends on the VC

Directors and other funds like theirs for employment. Taking any action contrary to

their wishes and demands could negatively impact his employment at IRL and with

future companies. Kauffman also benefited from promoting the “95% bots” lie as

the excuse for shutting down the Company, because that false excuse exonerated

him from any personal responsibility for having managed the billion-dollar company

67
into the ground in a few short weeks after he took over as CEO, and thus protected

his reputation as an executive.

180. A demand on the Board by Plaintiffs would also have been futile

because each of Chien, Dayal, Maples, and Kauffman faces a substantial likelihood

of liability on Plaintiffs’ claims, as alleged herein.

COUNT I – BREACH OF FIDUCIARY DUTIES OF LOYALTY AND

GOOD FAITH TO IRL
(By Plaintiffs Shafi and Khachatryan, Against Defendants Chien, Dayal, and
Maples)

181. Plaintiffs Shafi and Khachatryan repeat and reallege the allegations of

the above paragraphs as if fully set forth herein.

182. As Directors of IRL, Defendants Chien, Dayal, and Maples each owed

fiduciary duties to IRL and IRL stockholders, including the duties of loyalty and

good faith.

183. Chien, Dayal, and Maples each breached their duties of loyalty and

good faith through actions that put their own personal and financial interests ahead

of those of the Company and its stockholders.

184. Chien, Dayal, and Maples intentionally acted to protect their own

personal reputations and those of their venture capital firms—respectively,

Goodwater, SoftBank, and Floodgate—as investors and business leaders, rather than

advance the best interests of IRL.

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 185. Beginning no later than April 2023, and continuing as their hand-picked

CEO destroyed IRL’s business prospects and user experience under their oversight,

the VC Directors sought to protect their own financial interests and reputations by

falsely scapegoating Shafi for purported “misconduct” at IRL. By removing Shafi

as CEO, and simultaneously communicating or causing IRL to communicate to

media that Shafi had been suspended for an alleged “pattern of misconduct,” the VC

Directors intentionally scapegoated Shafi by connecting him to the false “bot”

rumors and insulated themselves from negative public scrutiny concerning IRL.

186. Abruptly removing Shafi as CEO materially harmed IRL, as it deprived

the Company of leadership and managerial experience it needed to continue its

growth and maintain its operations. Falsely associating Shafi’s removal with the

“bot” rumors also harmed IRL, as it gave undeserved credibility to those false

rumors.

187. The VC Directors also breached their fiduciary duty of loyalty by

purporting to appoint Scott Kauffman as CEO of IRL. Kauffman did not have the

experience or credentials necessary to build IRL and capitalize on its potential.

Rather than install Desai as CEO, as required by IRL’s bylaws, the VC Directors

installed Kauffman, a complete outsider with no understanding of IRL’s business.

Kauffman’s appointment advanced the personal and reputational interests of the VC

Directors because his chief qualification for the job was his loyalty to them, as a

69
long-time ally and former colleague of Chien. By appointing Kauffman and

apparently directing him to preserve the Company’s capital for potential distribution

to their employers (the VC Fund Defendants) as preferred stockholders in any

liquidation event, the VC Directors again breached their fiduciary duty of loyalty by

advancing their and their employers’ financial self-interests rather than the best

interests of the Company and common stockholders.

188. As part and parcel of their fiduciary breach, the VC Directors violated

corporate bylaws in purporting to appoint Kauffman as CEO of IRL. Section 29(c)

of IRL bylaws provides that if the CEO office is “vacant,” then the President serves

as CEO: “If the office of Chief Executive Officer is vacant, the President will be the

chief executive officer of the corporation (including for purposes of any reference to

Chief Executive Officer in these Bylaws) and will, subject to the control of the Board

of Directors, have general supervision, direction and control of the business and

officers of the corporation.” When the Special Committee of the Board installed

Kauffman as CEO it violated the bylaws that expressly state that, if the office of the

CEO is vacant, the President will be the CEO. IRL’s President at that time was Krutal

Desai. The VC Directors also violated Section 29(a) of the IRL bylaws, which

provides that the full Board appoints officers, including the CEO.

189. By exceeding their authority and violating the bylaws to install

Kauffman as CEO, the VC Directors placed their own interests ahead of those of the

70
Company. Rather than turn to an experienced co-founder of the Company for

leadership—as required by IRL’s bylaws—or leave the decision up to a vote of the

full Board where the Company’s founders had an equal say, the VC Directors turned

to an outsider who would best serve their personal interests in protecting their

reputations as investors and helping pin the blame for any problems at IRL on Shafi.

190. The VC Directors further breached their duties of loyalty and good faith

when, on information and belief, they directed Kauffman to wrongfully purport to

remove Shafi from the Board and take his place there, cementing their majority

control of the Board before holding the vote on whether to dissolve the Company.

191. The VC Directors further breached their duties of loyalty and good faith

by cooperating with each other and Kauffman to hastily shut down IRL’s business.

Shutting down IRL on the pretense that its user base was 95% bots, even though the

VC Directors knew this conclusion was contradicted by substantial evidence

collected in the outside investigations by Faegre and Celerity, the 2021 survey by

Goodwater, the Google Metrics authentication data, and the internal investigations

by Strand, was personally beneficial to the VC Directors, who could divert their

attention and resources to their other investments and still claim they were skilled

investors and responsible business leaders who were defrauded by a rogue CEO.

Due to their liquidation preference as preferred stockholders, they also stood to

recoup funds for their firms to a greater degree than common stockholders by

71
liquidating the Company. But the decision to hastily shut down the Company

severely harmed IRL and stockholders. Rather than promote the truth that IRL’s

users were not dominated by bots, and work with the Company to remove the bots

that did exist on the platform so that human users could continue to use IRL and the

platform could continue to grow and increase in value, the VC Directors acted to

protect themselves from personal scrutiny by abruptly shutting down IRL and falsely

blaming the shut-down on the “95% bots” lie.

192. The VC Directors’ breaches of fiduciary duties destroyed what had

been a billion-dollar-plus business, wiping out all the Company’s value. Those

breaches were thus a proximate cause of actual damages to IRL, and the Company

is entitled to compensatory damages for this loss of value in an amount to be proven

at trial.

COUNT II – BREACH OF BYLAWS

(By All Plaintiffs, Against Defendants Chien, Dayal, and Maples)

193. Plaintiffs repeat and reallege the allegations of the above paragraphs as

if fully set forth herein. 10

194. Defendants Chien, Dayal, and Maples violated IRL’s corporate bylaws

in purporting to appoint Kauffman as CEO of IRL. Section 29(c) of IRL’s bylaws

provides that if the CEO office is “vacant,” then the President serves as CEO: “If the

10
Plaintiff Desai asserts this claim only against Defendants Chien and Maples.

72
office of Chief Executive Officer is vacant, the President will be the chief executive

officer of the corporation (including for purposes of any reference to Chief Executive

Officer in these Bylaws) and will, subject to the control of the Board of Directors,

have general supervision, direction and control of the business and officers of the

corporation.” When Defendants Chien, Dayal, and Maples installed Kauffman as

CEO rather than IRL’s President, Krutal Desai, they violated Section 29(c) of IRL’s

bylaws. The VC Directors also violated Section 29(a) of the IRL bylaws, which

provides that the full Board appoints officers, including the CEO. The VC Directors

further violated IRL’s bylaws, including this same provision, when the Special

Committee purported to appoint Kauffman as President of IRL, replacing Desai,

even though both Kauffman’s appointment as President and Desai’s removal from

the position of President required approval by a majority of the full Board.

195. The VC Directors’ breach of bylaws by installing Kauffman instead of

Desai (or someone else agreed to by IRL’s founders) as CEO of IRL had dire

consequences for the Company, demoralizing employees and communicating to

them that IRL as they knew it was over and would likely be shut down and sold for

parts. Had the VC Directors installed Desai as CEO, or appointed someone else

agreed to by IRL’s founders, as required by the bylaws, Desai (or someone else with

relevant experience and the support of the founders) could have maintained stability

73
at IRL and either led the Company to achieve its product goals or spearheaded the

retainment of a new CEO who could have done so.

196. Plaintiffs are entitled to compensatory damages for the injury flowing

from the VC Directors’ breach of IRL’s bylaws in an amount to be proved at trial.

COUNT III – BREACH OF FIDUCIARY DUTIES OF CARE, LOYALTY,

AND GOOD FAITH TO IRL
(By Plaintiffs Shafi and Khachatryan, Against Defendant Kauffman)

197. Plaintiffs Shafi and Khachatryan repeat and reallege the allegations of

the above paragraphs as if fully set forth herein.

198. Although his appointment by a non-majority of the Board was invalid,

when Defendant Kauffman assumed the office of CEO of IRL and took executive

actions as such, he owed fiduciary duties to IRL and IRL stockholders. Kauffman’s

fiduciary duties included the duties of care, loyalty, and good faith.

199. Kauffman breached his fiduciary duty of care to IRL by intentionally,

or with gross negligence, destroying IRL’s business prospects. In meetings with IRL

employees following his assumption of the CEO role, Kauffman expressed little

knowledge or interest in IRL’s business. When IRL experienced technical outages

in May 2023, Kauffman failed to marshal the resources to adequately address the

outages. On information and belief, Kauffman failed to even contact IRL’s Head of

Backend Engineering for days following the complete outage of IRL’s platform.

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When the technical outages were finally addressed, and IRL’s users had largely fled,

Kauffman failed to engage in reasonable efforts to re-engage IRL’s users.

200. As a result of Kauffman’s intentional or grossly negligent

mismanagement and failure to oversee IRL’s operations, IRL lost substantially all

of its users and, with no efforts to re-engage them, its prospects for economic

success. Kauffman’s actions contributed to the destruction of the value of IRL and

the value of IRL stockholders’ equity interests in the Company.

201. Kauffman breached his duties of loyalty and good faith to IRL because

he elevated the interests of the VC Directors over the interests of the Company and

its stockholders. As alleged above, Kauffman had a decades-long relationship with

Chien, who installed him as CEO at IRL to serve Chien’s interests. Kauffman was

beholden to Chien, and the other VC Directors, as the controllers of his employment

at IRL. As alleged herein, Kauffman’s actions leading to the destruction of

stockholder value at IRL resulted from his allegiance to the VC Directors above the

Company, and efforts to take actions in their best interests that sought to maximize

short-term returns for them—as preferred shareholders with a liquidation

preference—rather than for the good of the Company and its long-term value for

stockholders as a whole. Kauffman’s actions leading to the destruction of

stockholder value at IRL also resulted from his placing his own personal reputational

and financial interests above the Company’s interests, as quickly shutting the

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Company down and blaming its problems on bots would prevent Kauffman from

personally being blamed for having mismanaged the Company so badly in just the

handful of weeks after he became CEO.

202. Kauffman’s actions proximately caused the destruction of what had

been a billion-dollar-plus business, wiping out all the Company’s value. Those

breaches were thus a proximate cause of actual damages to IRL, and the Company

is entitled to compensatory damages for this loss of value in an amount to be proven

at trial.

COUNT IV – BREACH OF VOTING AGREEMENT

(Against Defendant Kauffman)

203. Plaintiffs repeat and reallege the allegations of the above paragraphs as

if fully set forth herein.

204. Defendant Kauffman violated IRL’s Amended and Restated Voting

Agreement by improperly voting Shafi’s, Desai’s, and Khachatryan’s shares as a

purported proxy for them on June 23, 2023, to remove Shafi from the Board.

205. Kauffman was not a legitimate proxy for any of the Plaintiffs under the

Voting Agreement. Under Section 4.2 of IRL’s Voting Agreement, only the

President and Treasurer of the Company has proxy authority to vote a stockholder’s

shares and only under certain circumstances.

206. Section 4.2 of the Voting Agreement provides, in relevant part:

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 Each party to this Agreement hereby constitutes and appoints as the
proxies of the party and hereby grants a power of attorney to the
President and Treasurer of the Company, . . . with full power of
substitution, with respect to the matters set forth herein, including
without limitation, election of persons as members of the Board in
accordance with Section 1 hereto . . . and hereby authorizes each of
them to represent and to vote, if and only if the party (i) fails to vote
or (ii) attempts to vote (whether by proxy, in person or by written
consent), in a manner which is inconsistent with the terms of this
Agreement, all of such party’s Shares in favor of the election of persons
as members of the Board.

207. When Kauffman purported to vote Shafi’s shares in favor of removing

Shafi from the Board and electing himself to the Board in Shafi’s place, he did so on

the basis of his unauthorized status as “President” of IRL. Kauffman was not a

validly authorized President of IRL. On information and belief, as of June 23, 2023,

the Special Committee had purported to appoint Kauffman as President of IRL, but

it was defective because the appointment was not approved by a majority of the

Board, as required under IRL’s corporate bylaws. Desai was the properly-appointed

President of IRL.

208. Although he was not a properly appointed President of IRL, Kauffman

purported to vote Plaintiffs’ shares in a manner he knew they opposed. Moreover,

even if Kauffman could have had proxy authority to vote Plaintiffs’ shares upon a

failure by them to vote, there was no valid basis or authorization for Kauffman to

vote their shares so quickly. They had not reasonably “fail[ed] to vote” under Section

4.2 of the Voting Agreement. That they had not voted their shares by the arbitrary

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deadline of 8:30am Pacific Time on June 23, 2023—just 24 hours after they had

first been given notice of the request to vote—did not constitute a failure to vote

sufficient to authorize a proxy to vote on their behalf under the Voting Agreement.

Moreover, Kauffman knew that at least Shafi and Desai would be present at the

upcoming Board meeting on June 23, 2023—just minutes after he voted their shares

by proxy based on a purported failure to vote.

209. By improperly voting Plaintiffs’ shares as a proxy, in violation of the

Voting Agreement, Kauffman caused substantial damage to IRL’s business and to

Plaintiffs. Kauffman’s breaches of the Voting Agreement led to Shafi’s exclusion

from the Board’s meeting on June 23, 2023, and gave the VC Directors majority

control over the Board at that meeting, at which the Board voted to dissolve IRL,

destroying the value of IRL (and thus the value of Plaintiffs’ common stock).

Plaintiffs are entitled to compensatory damages in an amount to be proved at trial.

COUNT V – AIDING AND ABETTING BREACHES OF FIDUCIARY

DUTY TO IRL
(By Plaintiffs Shafi and Khachatryan, Against Defendants SoftBank Advisers,
Goodwater, and Floodgate)

210. Plaintiffs Shafi and Khachatryan repeat and reallege the allegations of

the above paragraphs as if fully set forth herein.

211. By providing Dayal with professional support, advice, guidance, and

influence, SoftBank Advisers substantially aided, abetted, and/or participated with

its agent, Dayal, in Dayal’s breaches of fiduciary duty to IRL, as described herein.

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Moreover, on information and belief, SoftBank employees other than Dayal were

actively engaged in steering and promoting the Special Committee’s actions,

including in-house counsel from SoftBank. On information and belief, SoftBank

Advisers was intimately involved in directing and controlling Dayal’s actions with

respect to IRL.

212. By providing Chien with professional support, advice, guidance, and

influence, Goodwater substantially aided, abetted, and/or participated with its agent,

Chien, in Chien’s breaches of fiduciary duty to IRL, as described herein. On

information and belief, Goodwater was intimately involved in directing and

controlling Chien’s actions with respect to IRL. Moreover, on information and

belief, Goodwater employees other than Chien were actively engaged in steering the

Special Committee’s actions, including Goodwater’s in-house counsel. Indeed,

Goodwater employees and data scientists joined a private Slack channel with IRL

employees and solicited data and information directly from IRL employees after

Shafi’s suspension, during the same time when the VC Directors and Kauffman were

planning and then executing the improper dissolution of the Company. On

information and belief, these Goodwater employees were working at least in part to

advance the Special Committee’s agenda of shutting IRL down on the false pretense

that its users were dominated by bots and/or that its user statistics were inflated by

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bots, and also to ensure that other Goodwater portfolio companies could obtain the

benefit of certain of IRL’s confidential research and intellectual property.

213. Likewise, by providing Maples with professional support, advice,

guidance, and influence, Floodgate Fund substantially aided, abetted, and/or

participated with its agent, Maples, in Maples’s breaches of fiduciary duty to IRL

and Shafi, as described herein. On information and belief, Floodgate was intimately

involved in directing and controlling Maples’s actions with respect to IRL.

214. SoftBank Advisers, Goodwater, and Floodgate’s actions in aiding and

abetting the VC Directors’ breaches of fiduciary duty to IRL were a proximate cause

of actual damage to IRL. Their actions caused substantial damage to IRL’s business

and stockholder value and were a proximate cause of actual damages to IRL and IRL

stockholders, and the Company is entitled to compensatory damages for this loss of

value, in an amount to be proved at trial.

COUNT VI – VICARIOUS LIABILITY AND RESPONDEAT SUPERIOR

(ON BEHALF OF IRL)
(By Plaintiffs Shafi and Khachatryan, Against Defendants SoftBank Advisers,
Goodwater, and Floodgate)

215. Plaintiffs Shafi and Khachatryan repeat and reallege the allegations of

the above paragraphs as if fully set forth herein.

216. Defendants SoftBank Advisers, Goodwater, and Floodgate are

vicariously liable for the conduct of their employees and agents, respectively, Dayal,

Chien, and Maples.

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 217. On information and belief, Serena Dayal is employed by SoftBank

Advisers as a partner and acted as its agent at all relevant times with respect to IRL.

SoftBank Advisers exercised control over Dayal’s actions as an agent and employee,

and at all relevant times, Dayal’s actions in connection with IRL were within the

scope of her employment and agency for SoftBank Advisers. As such, SoftBank

Advisers is responsible for Dayal’s misconduct, as alleged herein, which was a

proximate cause of Plaintiffs’ injuries.

218. On information and belief, Chi-Hua Chien is employed by Goodwater

Capital, LLC as a managing partner and acted as its agent at all relevant times with

respect to IRL. Goodwater Capital, LLC exercised control over Chien’s actions as

an agent and employee, and at all relevant times, Chien’s actions in connection with

IRL were within the scope of his employment and agency for Goodwater Capital,

LLC. As such, Goodwater Capital, LLC is responsible for Chien’s misconduct, as

alleged herein, which was a proximate cause of Plaintiffs’ injuries.

219. On information and belief, Chien is also a partner and an agent of

Goodwater Capital III, L.P. Together with Goodwater Capital, LLC, Goodwater

Capital III, L.P. exercised control over Chien’s actions as an agent, and at all relevant

times, Chien’s actions in connection with IRL were within the scope of his agency.

As such, Goodwater Capital, LLC is responsible for Chien’s misconduct, as alleged

herein, which was a proximate cause of Plaintiffs’ injuries.

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 220. On information and belief, Mike Maples, Jr., is a partner and an agent

of Floodgate Fund V, L.P. Floodgate exercised control over Maples’s actions as an

agent, and at all relevant times, Maples’s actions in connection with IRL were within

the scope of his agency. As such, Floodgate Fund V, L.P. is responsible for Maples’s

misconduct, as alleged herein, which was a proximate cause of Plaintiffs’ injuries.

COUNT VII – TORTIOUS INTERFERENCE WITH PROSPECTIVE

ECONOMIC EXPECTANCY
(By All Plaintiffs, Against All Defendants)

221. Plaintiffs repeat and reallege the allegations of the above paragraphs as

if fully set forth herein. 11

222. Defendants’ misconduct as described herein destroyed the value of

stock options that Plaintiffs held in IRL. But for Defendants’ misconduct, Plaintiffs

had a reasonable probability of obtaining substantial value upon the sale of their

options, which held significant value at the time of Defendants’ misconduct.

223. Shafi holds 500,000 stock options in IRL, Desai holds 500,000 options,

and Khachatryan holds 480,000. These options were issued to them on October 15,

2020—long before the Series C fundraising—and had a strike price of $0.32 per

share. They were therefore “in the money” if IRL had a valuation exceeding that

amount, which it did at the time of the Series C transaction in 2021 and thereafter.

On information and belief, the actual value of IRL’s common stock was much higher

11
Plaintiff Desai does not assert this claim against Defendants Dayal or SoftBank Advisers.

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than $0.32 per share, such that these stock options were in the money and held

substantial value at the time of Defendants’ misconduct. As of 2022, an independent

409A valuation valued the common stock of IRL at $4.50 per share, well above the

strike price of Plaintiffs’ options.

224. Before Defendants’ misconduct, it was reasonably probable that

Plaintiffs would have a business opportunity to realize the value of their stock

options by exercising them.

225. Defendants intentionally interfered with Plaintiffs’ ability to recoup the

substantial value of their options by destroying IRL’s value and causing IRL to be

shut down as a going concern, thereby proximately causing Plaintiffs’ stock options

to become worthless. Plaintiffs are entitled to compensatory damages for the loss of

value in their stock options in an amount to be proved at trial.

COUNT VIII – DEFAMATION PER SE OF ABRAHAM SHAFI

(By Plaintiff Shafi, Against Defendants Chien, Dayal, Maples, and Kauffman)

226. Plaintiff Abraham Shafi repeats and realleges the allegations of the

above paragraphs as if fully set forth herein.

227. On or before April 30, 2023, Chien, Dayal, and Maples defamed

Abraham Shafi by making or directing an IRL spokesperson to make a statement to

a reporter at The Information that Shafi was suspended as CEO of IRL due to a

“pattern of misconduct.”

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 228. At the time of this statement, The Information had previously published

three articles reporting and suggesting that IRL may have inflated its user statistics

through the use of automated bots. In an article published on May 12, 2022, The

Information reported: “inside the company, some employees recently expressed

concern to managers about the usage figures the company has touted, according to

two people with direct knowledge of the situation. The issue seems to stem from

Shafi’s use of a more expansive definition of active users than that of established

social apps like Facebook, as well as emerging ones. These people told The

Information they felt the company may have used an unconventional definition to

make the app appear bigger than it is.”

229. Similarly, in an article published on April 27, 2023—three days before

the Defendants’ statement at issue here—The Information reported that “A former

employee of SoftBank-backed messaging app IRL alleged in a legal filing that the

company has inflated its user count.”

230. Then, on April 28, 2023, The Information published a story erroneously

stating that “Shafi ha[d] stepped down as CEO of . . . IRL following allegations that

the company used bots to inflate the users it reported publicly and to investors.” On

information and belief, the VC Directors either conveyed this false information to

The Information, or directed that it be communicated to The Information.

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 231. By specifically communicating to The Information, on or before April

30, 2023, that Shafi had engaged in a “pattern of misconduct” warranting his

suspension as CEO, the VC Directors falsely conveyed to The Information that Shafi

had inflated IRL’s user statistics. When making this communication to The

Information, the VC Directors knew that The Information would publish it and that

it was substantially certain to become public.

232. The Information published the slanderous statement in an article on

April 30, 2023, titled “IRL Suspended CEO Shafi After Reported Pattern of

Misconduct; Acting CEO Named.”

233. On June 23, 2023, Chien, Dayal, Maples, and Kauffman defamed Shafi

by making or directing an IRL spokesperson to make a statement to a reporter at The

Information as well as in an IRL letter to stockholders that falsely proclaimed that

“95% of identified users [of IRL] were in fact automated or from bots, not authentic,

human users.” In the context of the multiple previous articles published by The

Information suggesting that Shafi may have inflated IRL’s user statistics, this

statement falsely conveyed that Shafi had done so. When making this

communication to The Information, Defendants knew that The Information would

publish it and that it was substantially certain to become public.

234. The Information published the slanderous statement in an article on

June 23, 2023, titled “Social App IRL, Which Raised $200 Million, Shuts Down

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After CEO Misconduct Probe.” The article made the exact false inference—the Shafi

had inflated IRL’s user numbers—that Defendants intended their statement to

convey. It stated: “Last year, the CEO of messaging app IRL repeatedly said it had

20 million monthly active users, who chatted about shared interests and planned

real-world events together. Today, a spokesperson for the startup said an

investigation by the board of directors concluded 95% of those users were

‘automated or from bots.’”

235. As accusations of nothing less than fraud, Defendants’ false portrayals

of Shafi as having inflated IRL’s user statistics would be highly offensive to a

reasonable person. By imputing Shafi with a crime and maligning him in the

technology start-up industry and business community as untrustworthy and

deceitful, the statements made or directed by the VC Directors and Kauffman

constitute defamation per se.

236. Defendants knew or recklessly disregarded the falsity of their portrayal

of Shafi as having inflated IRL’s user statistics. As recounted herein, at the time of

the statement, Defendants were aware of multiple credible reports that IRL’s user

statistics were not substantially inflated by bot accounts (let alone 95% inflated).

Defendants were also aware that Keystone’s conclusions about bots on IRL were

unreliable because of the timing of the Keystone report, its biased objective, its

failure to account for contradictory evidence, its rushed preparation by inexpert

86
personnel, and Goodwater data scientists’ own conclusion that the RedShift database

that Keystone relied upon was not reliable.

237. In view of the foregoing, Shafi is entitled to actual, general, presumed,

punitive, and other economic damages in an amount to be specifically determined at

trial.

COUNT IX – FALSE LIGHT INVASION OF ABRAHAM SHAFI’S

PRIVACY PER SE
(By Plaintiff Shafi, Against Defendants Chien, Dayal, Maples, and Kauffman)

238. Plaintiff Abraham Shafi repeats and realleges the allegations of the

above paragraphs as if fully set forth herein.

239. On or before April 30, 2023, Chien, Dayal, and Maples placed Abraham

Shafi in a false light before the public by making or directing an IRL spokesperson

to make a statement to a reporter at The Information that Shafi was suspended as

CEO of IRL due to a “pattern of misconduct.”

240. At the time of this statement, The Information had previously published

three articles reporting and suggesting that IRL may have inflated its user statistics

through the use of automated bots. In an article published on May 12, 2022, The

Information reported: “inside the company, some employees recently expressed

concern to managers about the usage figures the company has touted, according to

two people with direct knowledge of the situation. The issue seems to stem from

Shafi’s use of a more expansive definition of active users than that of established

87
social apps like Facebook, as well as emerging ones. These people told The

Information they felt the company may have used an unconventional definition to

make the app appear bigger than it is.”

241. Similarly, in an article published on April 27, 2023—three days before

the Defendants’ statement at issue here—The Information reported that “A former

employee of SoftBank-backed messaging app IRL alleged in a legal filing that the

company has inflated its user count.”

242. Then, on April 28, 2023, The Information published a story erroneously

stating that “Shafi ha[d] stepped down as CEO of . . . IRL following allegations that

the company used bots to inflate the users it reported publicly and to investors.” On

information and belief, the VC Directors either conveyed this false information to

The Information, or directed that it be communicated to The Information.

243. By specifically communicating to The Information, on or before April

30, 2023, that Shafi had engaged in a “pattern of misconduct” warranting his

suspension as CEO, the VC Directors falsely conveyed to The Information that Shafi

had inflated IRL’s user statistics. When making this communication to The

Information, the VC Directors knew that The Information would publish it and that

it was substantially certain to become public.

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 244. The Information published the slanderous statement in an article on

April 30, 2023, titled “IRL Suspended CEO Shafi After Reported Pattern of

Misconduct; Acting CEO Named.”

245. On June 23, 2023, Chien, Dayal, Maples, and Kauffman again placed

Abraham Shafi in a false light by making or directing an IRL spokesperson to make

a statement to a reporter at The Information as well as in an IRL letter to stockholders

that falsely proclaimed that “95% of identified users [of IRL] were in fact automated

or from bots, not authentic, human users.” In the context of the multiple previous

articles published by The Information suggesting that Shafi may have inflated IRL’s

user statistics, this statement falsely conveyed that Shafi had done so. When making

this communication to The Information, Defendants knew that The Information

would publish it and that it was substantially certain to become public.

246. The Information published the slanderous statement in an article on

June 23, 2023, titled “Social App IRL, Which Raised $200 Million, Shuts Down

After CEO Misconduct Probe.” The article made the exact false inference—the Shafi

had inflated IRL’s user numbers—that Defendants intended their statement to

convey. It stated: “Last year, the CEO of messaging app IRL repeatedly said it had

20 million monthly active users, who chatted about shared interests and planned real-

world events together. Today, a spokesperson for the startup said an investigation

89
by the board of directors concluded 95% of those users were ‘automated or from

bots.’”

247. As accusations of nothing less than fraud, Defendants’ false portrayals

of Shafi as having inflated IRL’s user statistics would be highly offensive to a

reasonable person. By imputing Shafi with a crime and maligning him in the

technology start-up industry and business community as untrustworthy and

deceitful, the statements made or directed by the VC Directors and Kauffman

exposed Shafi to contempt and ridicule, constituting slander per se.

248. Defendants knew or recklessly disregarded the falsity of their portrayal

of Shafi as having inflated IRL’s user statistics. As recounted herein, at the time of

the statement, Defendants were aware of multiple credible reports that IRL’s user

statistics were not substantially inflated by bot accounts (let alone 95% inflated).

Defendants were also aware that Keystone’s conclusions about bots on IRL were

unreliable because of the timing of the Keystone report, its biased objective, its

failure to account for contradictory evidence, and its rushed preparation by inexpert

personnel.

249. In view of the foregoing, Shafi is entitled to actual, general, presumed,

and other economic damages in an amount to be specifically determined at trial.

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 PRAYER FOR RELIEF

WHEREFORE, Plaintiffs respectfully request that the Court enter an award

and judgment in their favor, and against Defendants, as follows: 12

(a) Awarding IRL damages for lost enterprise value and other economic losses

in an amount to be established at trial;

(b) awarding Plaintiffs general compensatory damages for their direct claims

in an amount to be determined at trial;

(c) awarding Plaintiff Abraham Shafi general and special damages for

Defendants’ defamatory acts and false light invasion of privacy;

(d) awarding Plaintiffs pre- and post-judgment interest;

(e) awarding Plaintiffs all expenses and costs, including attorneys’ fees; and

(f) such other and further relief as the Court deems appropriate.

12
Plaintiff Krutal Desai does not seek any derivative relief on behalf of IRL, and does not
seek any relief at all against Defendants Serena Dayal or SB Investment Advisers (US) Inc.

91
 MORRIS, NICHOLS, ARSHT &
TUNNELL LLP

/s/ Kevin M. Coen

Kevin M. Coen (#4775)
Of Counsel: Courtney Kurz (#6841)
1201 North Market Street
SUSMAN GODFREY L.L.P. Wilmington, DE 19801
(302) 351-9344
Stephen Shackelford, Jr
Shawn Rabin Attorneys for Plaintiffs Abraham Shafi,
Eve Levin Krutal Desai, and Genrikh Khachatryan
1301 Ave. of the Americas, 32nd Fl.
New York, New York 10019
(212) 336-8330

Kemper Diehl
401 Union Street, Suite 3000
Seattle, WA 98101
(206) 373-7382

November 15, 2023

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