Failory - The 3 Reasons Why Houseparty Failed

Hey — It's Nico.

New month, new series of content. In October, I'll be publishing articles analyzing various companies' failures. This week, we explored the 3 Reasons Why Houseparty Failed.

🙌 Welcome to the 458 founders who joined this week.

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What Was Houseparty? Houseparty was a video-based social media platform that allowed users to connect via video calls and chats. It was available for Android and iOS, as a Chrome extension, and via the Houseparty website.

Houseparty was geared toward the younger generation and purely social uses. The app included fun features like the ability to drop in and out of video chats at random and in-app games, like Uno, Heads Up, and trivia.

How Was Houseparty Started? Houseparty was a subdivision of a company called Life On Air, a live video streaming platform originally founded in Israel in 2012 by entrepreneurs Ben Rubin and Itai Danino.

Before starting Houseparty, the founders tried two similar ideas, called Yevvo and Meerkat, both of which were shut down. With a significant chunk of funding left, Ben and Itai pivoted and started working on what would turn out to be Houseparty.

Houseparty launched in February 2016, and within just a few months of being released, it had already gained thousands of users. This earned them $52 million in funding in a seed round held in December 2016.

By 2019, the app's growth was slowing, and funding was running out. That's when Epic Games announced they were acquiring Houseparty for $35 million.

​In the article, we dive deeper into Houseparty's beginnings story.

What Happened During the Pandemic? When the global pandemic hit, like many other online social platforms, Houseparty saw an unexpected boom in growth.

The app was downloaded by 50 million+ additional users and became the number one social platform in 82 countries around the world.

But, on September 9th, 2021, Epic Games made an unexpected announcement: the Houseparty app would shut down the following month.

Why Did Houseparty Shut Down? 3 reasons contributed to Epic's decision:

• End of the Pandemic: As COVID-19 lockdowns were lifted, interest in Houseparty declined. It’s likely that Epic’s original reason for acquiring Houseparty was to incorporate its technology into their creations and to shut it down eventually. They just put these plans on hold during the pandemic when Houseparty’s popularity was skyrocketing.
• Lack of Funding: The company was already running out of funds when it was sold to Epic Games. Epic would have to invest a significant amount of money into kickstarting Houseparty’s growth again after the pandemic - it probably made more sense for them to shut it down.
• Epic Games Shifting Focus: The official shutdown announcement by Epic Games explained they could no longer give the app or its community the attention they deserved, showing that its focus was on other areas, specifically the Epic Games “metaverse.”

Will Houseparty Come Back? Epic Games has not announced plans to bring Houseparty back after it shut down the app and pulled it from app stores.

None of Houseparty’s team members were let go when the app shut down. They moved to different teams at Epic Games to work on other ways to integrate social interactions into Epic’s suite of products.

It remains to be seen whether or not this is the last we’ve heard of Houseparty or if the company’s name will pop up somewhere in the metaverse in the years to come.

If you're interested in learning further about Houseparty's founding, growth, and shutdown story, check out our latest article.

On October 14, 15, and 16th, I'll be speaking at the ScaleUp Summit, a free online event designed to help entrepreneurs accelerate their journey and scale their businesses. The topic of my talk is how to use pre-sales to validate startup ideas. You can get tickets here.

As every week, here are 3 recommended resources:

• ​The Journey Bootstrapping a SaaS to $10k MRR: Data Fetcher is a SaaS that connects Airtable with APIs. It has recently hit $10k in MRR. In this article, Andy Cloke, its founder, shares the whole journey.
• ​Product Led Growth Framework Masterclass: The term "product-led growth" has become popular in recent years. This video explains what product-led growth is and how you can use it to accelerate the growth of your business.
• ​12 Tested Methods to Validate your Idea: We've written several times about the importance of validating startup ideas. In this free tool, you can find 12 ways to validate an idea, along with its cost, pros, cons, resources, and more.

Hope you enjoyed this week's article and curated resources ;)

Cheers,

Nico