Executive Summary:
Kik is a free mobile messaging application that can be used to send audio, text, images, GIFs, as well as video files.
Kik failed because it consistently changed its strategic direction, changing ownership, as well as due to its inability to effectively moderate content on the platform.
Kik, after various failed attempts at reinventing the company, was sold to holding company MediaLab in 2019.
What Is Kik Messenger?
Kik is a free mobile messaging application that can be used to send audio, text, images, GIFs, as well as video files.
Users can either engage in one-to-one chats or enter a group of up to 49 people. Groups can either be private or publicly accessible. The public groups are searchable and can be identified by hashtags such as #Anime or #Music.
Consequently, users have the option to directly communicate with other users from that group. However, if that’s not desired, then one can disable the feature.
Kik, unlike other services like WhatsApp, differentiates itself by not requiring users to sign up with their phone number. Instead, they can simply select a user name (alongside their email) that suits them.
However, email addresses are not shared with other users. Instead, only the username, chosen name, as well as a profile picture is being displayed. Users, furthermore, have the ability to chat anonymously and only reveal their profile to someone else after they get to know them.
Another differentiating feature of Kik is its utilization of chatbots. These bots can be accessed via its very own Bot Shop and allow users to play games or interact with other companies such as CNN or H&M.
Kik can only be accessed by downloading its mobile application, which is available for Android and iOS devices. A browser version is not available.
Kik competed for messaging supremacy but has experienced a severe fall from grace over the past few years, which almost culminated in its shutdown. How it came to be, who is behind it, and reasons for why it ultimately failed to become a messaging powerhouse will be covered in the next few chapters.
What Happened To Kik?
Kik, headquartered in Waterloo, Canada, was founded in 2009 by University of Waterloo graduates Ted Livingston and Christopher Best.
The two founders both pursued engineering-related degrees that they began in 2005 (they would only meet later, though). As part of their studies, both had to complete six four-month internships.
Livingston himself chose to do most of those at Research In Motion (RIM), the maker of the Blackberry phone. There, Livingston had a front-row seat to the mobile revolution, which many believe had been ushered by the introduction of the iPhone in 2007.
He fell in love with mobile to the point that he considered dropping out and joining RIM full-time as a product manager.
His hiring manager, however, thought that his skills were better utilized somewhere else. In fact, he told him to finish his studies and then start his own mobile company.
After completing his final internship at RIM in December 2008, Livingston began working on his first startup called Unsynced. At the time, Blackberry phones, unlike the newly launched iPhone, did not support playing music on the device.
Livingston ultimately decided to join VeloCity, a University of Waterloo project that housed 70 entrepreneurial-minded students together, where he wound up meeting Chris Best. The company was started with $45,000 of Livingston’s own cash that he got from an inheritance.
The duo has been in conversations with music labels to secure the necessary rights to share tracks on BBM. Unfortunately, in large parts due to past experience with P2P platforms like LimeWire or Napster, negotiations with the music labels took what felt like an eternity.
In late 2009, the team took part in the BlackBerry Developer Challenge at DevCon where they teased a first version of Unsynced. A month later, in January 2010, the team managed to raise a $1 million seed round from RRE Ventures and Golden Triangle Angel Network.
This even prompted Livingston to disregard the advice from his former boss and he dropped out before the start of his last university year.
However, the founders would soon realize that dealing with the music labels would be an uphill battle. During that same time, cross-platform messaging services like Ping and WhatsApp began to take the world by storm, garnering over a million downloads within days of launching.
Sometime in the spring of 2010, they pivoted towards building a messaging platform. Initially, they wanted to include the BlackBerry Messenger (BBM) as another option, but RIM wouldn’t bulge.
In April 2010, while still trying to make the music product work, the team released the Kik Chat app for iOS and BlackBerry. Adoption was decent with 50,000 users that signed up during the first few weeks.
Over the course of the next few months, they worked on securing the necessary music licenses and began development on a second version of the messaging app. That second version, dubbed Kik Messenger, was finally unveiled in October 2010
The app became an absolute smash hit, reaching the two-million-user mark within 20 days of launching it. This even prompted Best and Livingston to abandon their work on Unsynced and completely focus on Kik.
However, not everything was always going according to plan. One of the reasons for the app’s virality and stickiness was the fact that Kik tapped into a user’s contact list and made it super easy to send your friends an invitation.
Unfortunately, automatically importing one’s contacts without asking for permission was against Apple’s iOS Developer Terms of Service. Livingston had to publicly apologize while Kik scrambled to create a fix days after the controversy emerged.
That wasn’t the only issue the young founders faced, though. A few days after the Apple backlash, Kik was pulled from RIM’s App World. On December 1st, 2010, further news broke that the phone manufacturer had even filed a lawsuit against the startup.
RIM claimed that the startup had infringed on three of its patents even though its executives knew that Kik was working on cross-platform messaging for months. Luckily, the day before the lawsuit was filed, the founders had signed a term sheet with RRE Ventures who would contribute $5 million to a round that eventually grew to $8 million by March 2011.
The additional cash allowed the small team of 10 employees to hire the necessary legal help and ensure it would have enough of a runway for the next few years.
Luckily, focusing on both Android and iOS proved to be the better decision in hindsight, with BlackBerry continuing to lose customers due to poorly executed product launches.
Livingston also made news after he donated $1 million (from the $8 million Series A) to The University of Waterloo’s VeloCity Residence, which earned him and Kik a lot of public goodwill and additional attention.
In June, to make up for the lacking BlackBerry users, Kik launched a separate app for the Windows Phone. That same month, it introduced an SDK for iOS developers, which would prove to be one of its most-crucial moves in the coming months and years (more on that later).
Months later, in October, Kik found a way to get back into the BlackBerry ecosystem. The team had built a Java ME app, which enabled them to circumvent the BlackBerry OS – and thus not be subject to additional lawsuits. At that point, its userbase had already grown to more than 4.5 million users.
To cap the year off, it introduced another app for Nokia’s Symbian device as well as an API that enabled developers to quickly implement mobile content sharing within their own apps to Kik’s six-million-strong userbase.
Being a small and thus nimble team, furthermore, allowed Kik to experiment with other products. In February 2012, it launched Clik, an app that allowed people to turn their mobile phones into remotes to control their smart TVs.
Throughout the year, Kik continued to unveil new features at a rapid pace, allowing it to grow to over 30 million registered users by the end of it. It, furthermore, unveiled Kik Cards, which were HTML5-based programs that would allow third-party developers to embed games, YouTube videos, or other types of apps within Kik.
The introduction of Cards, which prompted renowned developers such as Zynga (creator of FarmVille, amongst other titles) to introduce dedicated apps, allowed Kik to grow at an even greater rate. By April 2013, Kik had totaled 50 million registered users.
That same month, the team managed to raise another round of funding, this time netting them $19.5 million from Foundation Capital and other investors.
In July, the company finally began to monetize its userbase (it opted against showing banner ads to not diminish the user experience). Kik introduced purchasable stickers, which helped other messaging platforms like Line to generate millions in annual revenue.
Its ever-increasing relevance also increased its negotiation power, which in turn led to a settlement with BlackBerry in October 2013. The sum that Kik, which had 90 million users at that point, had to pay was not disclosed.
Two months later, it crossed the inaugural mark of 100 million registered members. It ushered in the new year by doubling down on its platform approach by launching a built-in browser. Instead of redirecting users to other apps such as Google’s Chrome, they could simply continue browsing within the app.
Even the fact that Facebook ended up purchasing competitor WhatsApp for $19 billion in February 2014 did not deter the company from its ecosystem approach. The next stage of that strategy was to introduce a virtual currency called Kik Points, which could be used to earn rewards and thus increase app usage.
However, the increased usage would also mean that malicious actors would begin to frequent the platform. In order to decrease spam activity, Kik introduced blurred images and avatars whenever a user received a message from a stranger. Additionally, it removed hundreds of malicious bots that were sending inappropriate or spammy messages.
Kik, despite increasing rumors that it would garner the interest of acquirers (other competitors such s GroupMe would be sold as well), remained in the ownership of its founders. Instead, the team beefed up its monetization by introducing promoted chats in late 2014.
By the end of the year, it had amassed over 150 million users. Moreover, in November, the team raised another $38.3 million in funding. The funding allowed Kik to make its first acquisition by purchasing GIF messaging app Relay.
The platform’s continuous innovation eventually allowed it to cross the 200-million-member mark in January 2015. In March, it adopted Microsoft’s PhotoDNA technology to detect and delete any child pornography, which began to ran rampant on the platform.
It especially continued to expand the functionalities of its browser from loading on the site to being displayed across the whole screen. Other added features included functionalities such as the ability to be matched with other users that share the same interest, for example in music or movies.
The platform’s continuous growth was rewarded with another $50 million in funding from Tencent, which valued Kik at $1 billion and thus allowed it to enter the unicorn club. Tencent itself is known for creating WeChat, which Livingston repeatedly cited as a major inspiration for Kik’s platform strategy.
The funding allowed Kik to not only beef up its hiring but acquire additional companies such as fashion app Blynk, which previously ran an application on Kik. Unfortunately, many of the firm’s partnerships, such as with Comedy Central or Vans, didn’t pan out as expected and didn’t lead to the revenue increases Livingston hoped they would yield.
As a result, Kik underwent a hard pivot towards bots, which by the spring of 2016, were all the rage. In April, it launched its Bot Store that would enable third-party developers to run bot applications within its messenger. Within weeks, brands like CNN, H&M, Fox, Yahoo, Sephora, and plenty more signed up.
A month after the store’s launch, Kik managed to reach 300 million registered users. While users exchanged over two billion messages with bots within less than six months of launching the platform, their relevancy soon began to diminish.
Kik, therefore, took inspiration from competitors such as Viber and WhatsApp and introduced (group) video calls, which were made possible by its acquisition of video chat app Rounds.
That acquisition, though, was made without co-founder Best who left the company in January and went on to launch the blogging platform Substack.
Livingston, however, simply decided to follow the next hype. In early 2017, Initial Coin Offerings (ICOs) were picking up steam, with newly-minted companies raising hundreds of millions off of them.
Kik itself would launch a coin called Kin, short for kinship, which was supposed to express its desire to enable developers to make a living from its ecosystem.
Meanwhile, negative press continued to accompany the company. A report by the British investigative media company Point as well as Forbes stated that Kik was “the defacto app for grooming children online” because of its predominantly young user base and lagging banning of malicious accounts.
Despite the public outcry against Kik, it still managed to complete its ICO in August 2017, raising close to $100 million from both private as well as institutional investors.
Portions of the ICO proceeds were used to form a safety advisory board that was tasked with building better user controls, helping to improve user safety education, and establishing a more comprehensive content moderation program.
Kik’s token was managed and run by a separate organization called the Kin Foundation, which was responsible for developing the products it had promised it would during its whitepaper. One of those products, called Kinit, was launched in July 2018 as an app on the Google Play Store.
Unfortunately, not everyone liked what the foundation was up to. In November, the U.S. Securities and Exchange Commission (SEC) filed a Wells notice, which is a formal letter that informs the other party of upcoming legal action.
Notably, Kik (or the Kin Foundation, in this case) wasn’t the only company that the SEC went after. It claimed that ICOs would constitute the sale of an unregistered security. The threat of possible legal ramifications, as well as a general cool down of the crypto market, led to a significant overall decrease in ICO activity post-2017.
Kik and Livingston denounced any claims that the SEC made and stated that they would fight any potential lawsuit coming their way. By May 2019, Kik had allegedly spent over $5 million fighting those claims.
Its ongoing legal battles, furthermore, affected other messaging apps. Telegram itself had planned to launch its own blockchain and native token, a project it ultimately abandoned.
Moreover, development on the Kik Messenger severely slowed down, especially after the SEC filed its first lawsuit against Kik Interactive in June. As a result of the legal uncertainty, CEO Livingston came out with a bombshell announcement on September 23rd, stating that he would be shutting down the Kik Messenger and reducing its employee count from 100 to 19.
Luckily, by mid-October, that course was eventually reversed. Livingston himself came out and stated that they managed to find a buyer that was soon to be announced.
On October 19th, 2019, Kik Interactive revealed that its messenger product would be acquired by media holding company MediaLab. An acquisition price was not disclosed, though.
In the meantime, Livingston continued to fight the court case over the coming months. That fight came to an end when, in September 2020, U.S. District Court Judge Alvin Hellerstein ruled in favor of the SEC after both parties filed motions for a summary judgment to bring the court case to an end without going to trial.
A month later, on October 20th, Kik Interactive and the SEC settled their case. Kik agreed to pay a fine of $5 million while being able to keep the rest of the ICO proceeds.
The Kik Messenger, in the meantime, simply just existed. MediaLab continued to unveil new features and bug fixes but largely resorted to keeping the platform as is without much innovation.
Nevertheless, Kik continued to grapple with the moderation issues that plagued its platform for so long. Various arrests and sentences were made after users on the platform had shared sensitive content such as child pornography. In March 2022, for example, a Virginia man was sentenced to 87 months in federal prison for distributing said material.
While Kik was one of the early success stories in the mobile (messaging) space, its relevancy has significantly decreased over the past few years. The reasons for its demise will thus be covered in the next chapter.
Why Did Kik Fail?
Kik failed because it consistently changed its strategic direction, changing ownership, as well as due to its inability to effectively moderate content on its platform.
As previously stated, Kik tried to reinvent itself a variety of times throughout its existence. It experimented with chatbots, a built-in browser, and its own native token.
Meanwhile, competitors like WhatsApp, with the financial help of Facebook, simply focused on providing a secure and smooth messaging experience.
In theory, following an ecosystem approach wasn’t the worst strategy given the success of WeChat. However, American and Chinese (or Asian for that matter) consumers have very different browsing patterns.
Asian users often spend a much greater time within their native apps, are not putting as much emphasis on privacy, and are more willing to spend cash on offerings such as stickers. As a result, many of today’s super apps are based in Asian countries like China or Singapore.
And while companies like Facebook experimented with chatbots (via Messenger), Kik essentially bet the farm on them becoming a dominant platform. Months later, its leadership team admitted that focusing on bots was a mistake.
But instead of returning to making messaging work, Livingston decided to start another company and tried to capitalize on another trend, namely ICOs. This led to tons of distractions to the point where Kik Interactive had to spend millions in legal fees to fight the SEC.
Part of Livingston’s desire to experiment with different business models arose from the fact that messaging apps are notoriously tough to monetize. WhatsApp abandoned its 99 cent fee years back and relied on funding from Facebook. Telegram’s founder, a multimillionaire, financed the development of the app himself.
As a result of the lacking revenue, Kik wasn’t able to invest resources into moderating content. This, given that its userbase is predominantly below the age of 18, became a huge PR problem for the platform.
To make matters worse, MediaLab decided to not do anything to combat this issue and instead simply resorted to inactivity. Therefore, the Kik Messenger has largely been relegated to a niche product that may still be used by a few million people but is vastly outgrown by the likes of WhatsApp and Telegram.
Who Owns Kik Right Now?
The Kik Messenger, since October 2019, is owned by the Los Angeles-headquartered holding company MediaLab.
MediaLab owns a number of other digital assets including Genius, Imgur, WorldstarHipHop, DatPiff, and many more.
Moreover, MediaLab has some experience running messaging applications. It actually started out running one itself called Whisper. Only later it pivoted towards acquiring other online media properties.
Given that Kik was on the brink of shutting down its messenger, it can be assumed that MediaLab was able to acquire it at a significant discount. A purchasing price, however, has not been disclosed to date.
