Not gonna lie, this NGL lawsuit is kinda juicy – TechCrunch

Not gonna lie, this NGL lawsuit is kinda juicy – Nob6

Category : Startup

Author: Nob6 Team

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The anonymous Q&A app NGL climbed to the top of the App Store by tricking its users with questions it claims are sent in by their friends and by charging for useless hints about who supposedly wrote those messages. But many of the questions users receive aren’t from real people; they’re generated automatically — an idea NGL’s top competitor, the maker of the Sendit apps, is now alleging NGL’s maker stole alongside other confidential business information, according to a new lawsuit.

In a complaint filed on July 1, 2022, in the Superior Court of California, Sendit’s creator, Iconic Hearts Holdings, Inc. (previously known as FullSenders), claims that NGL acquired its trade secrets through “improper means” as a result of a breach of duties by the suit’s defendant, Raj Vir, an Instagram software engineer, who had worked on Sendit on the side.

For those who don’t keep up with teen app trends, both Sendit and NGL are leading anonymous Q&A apps, a subgroup of social apps currently popular among a younger demographic. The apps have been ranking at the top of the app store charts for months, as anonymous apps typically do — before they implode from bullying, lawsuits or get banned by the app stores themselves.

As of today, NGL is the No. 5 top (non-game) free app on the U.S. App Store. Since launching late last year, the company has generated more than $2.4 million in revenue, according to third-party estimates. Sendit’s apps are currently ranked at No. 12 in Social Networking (Sendit) and No. 57 in Social Networking (Sendit — Q&A on Instagram), and have earned over $11 million, per data from Sensor Tower.

Both Sendit and NGL allow users to post links to their social accounts, like Instagram or Snapchat Stories, which friends can click on to send the poster anonymous questions. (Think: “who do you have a crush on?” and other teenage gossip.)

The recipient, in turn, receives the questions in the app’s inbox, and can then post their response to their social accounts for all to read. The apps monetize this activity by offering their users “hints” about the person asking the questions so they can find out who asked what.

While NGL focuses only on anonymous Q&As, Sendit offers two variations of its service. Its original app is aimed at Snapchat users and provides a variety of games in addition to the anonymous Q&A feature. Its newer app, meanwhile, brings anonymous Q&A’s to Instagram. It launched following Snapchat’s rollout of stricter policies earlier this year that banned anonymous apps from using its developer tools. (Sendit received an extension to come into compliance with those policies, Snapchat told us.)

The apps are problematic, however, because they’ve been demonstrated to be using misleading tactics to trick their young users into thinking they were receiving engagement from friends when they were not.

Both apps are also incredibly similar, including in their visual design, how they work, their business model and other aspects.

As it turns out, that may not have been an accident.

The recently filed Iconic Hearts lawsuit (see below) states that the company hired Vir to develop Sendit’s mobile apps back in September 2018. Vir then continued to consult with the company afterward, it says. In May 2021, Iconic Hearts began having conversations with Vir about offering him a full-time position or allowing him to continue as a contractor. But instead of taking the job, Vir took the company’s ideas and insights and used them to build his own version of Sendit’s app, the complaint explains.

“Vir was integral in founding, building, and launching ‘NGL – anonymous q&a,’ an app that is nearly identical to, and directly competes with, the Sendit apps,” reads the filing. It additionally details how Vir used his friendship with Iconic Hearts’ founder Hunter Rice and his role as a Sendit developer and consultant in order to gain information about the company and its apps. (Apparently, Rice and Vir weren’t just business colleagues, they were friends — former high school classmates who had bonded after college over their shared interest in tech, the filing notes.)

During Vir’s time working on Sendit’s apps, he had access to insider information — like which features drove the most user engagement and other future development plans, the lawsuit states. He had also signed a developer agreement, which forbade him from using this information for any other purpose beyond his work with the Sendit apps, it says.

Rice believes Vir was never serious about the job offered to him at Iconic Hearts, the complaint continues, but was instead using his ongoing access to build NGL, a copy of Sendit which launched in late 2021 on the App Store and soon became the App Store’s No. 1 app in June 2022.

The filing explains how Vir had access to detailed app data and KPIs (key performance indicators) and other metrics designed to make the app succeed. Because of his relationship with Sendit, Vir asked for and was given access to all sorts of business data and metrics — like click-through rates, conversion rates, which prompts were the highest performing, how they were ordered to create virality, the placement of call-to-action buttons, financial performance, MRR (monthly recurring revenue), churn rate, LTV (lifetime value), metrics related to average response rates, share counts, viral coefficients and much more.

Among these business details was Sendit’s use of fake questions. The company had previously denied using bots when Nob6 asked.

Many users of Sendit and NGL’s apps had already suspected some of the questions they received were not really coming from their friends, but had been automatically generated. The app stores are filled with user reviews that claim these apps are tricking them, then ripping them off by charging for unhelpful hints — like those that only share a user’s city or the type of phone they have.

Nob6 also recently tested both NGL and Sendit’s anonymous Q&A system by generating a link for questions but then didn’t show it to anyone, and yet still received half a dozen so-called “questions from friends” in our inboxes.

This feature is actually detailed in the new lawsuit as one of the many aspects of Sendit’s apps that NGL supposedly stole. Reads the complaint:

Iconic Hearts had also developed a unique system, “Engagement Messages,” which sends content to an inbox if interactions with the user had been idle over a certain period of time. “Engagement Message” re-trigger a user to use the app. This generates more “shares” on the app, more density within a user’s trend network (i.e. more people sharing more times), which adds to an app’s saturation, the most critical measure of success and growth. It took Iconic Hearts years of trial-and-error, testing, and iterating its product to optimize its proprietary Engagement Messages System and various components thereof, such as the optimal period of time after which to send an Engagement Message, how the Engagement Message gets pushed, the design of the Engagement Message, and the content of the Engagement Message.

This section essentially confirms users’ suspicions about the fake questions. It also now places a burden on the app stores to take action, we should think, as neither company discloses to its users that these “engagement messages” are not being sent by their friends as the app’s description would lead them to believe.

Surprisingly, Iconic Hearts didn’t know of Vir’s betrayal until recently. Even as late as June 2022, Vir concealed his involvement with NGL, the complaint states. The lawsuit claims Vir finally admitted his involvement to Rice on June 21, 2022, by saying “okay, I’ll clear the air. I’ve been lying to your face this entire time. I am building NGL,” and then, “congratulations for being the Head of Product at NGL.”

Yikes, if true.

Neither party has responded to our requests for comment at this time.

As to what extent Iconic Hearts will be able to prove its claims in a legal fashion remains to be seen. The suit is asking for damages and injunctive relief. The suit also names dozens of unknown defendants who may be working or partnering with NGL, which Iconic Hearts hopes the court will reveal and name.

ICONIC HEARTS HOLDINGS, INC. vs. RAJ VIR; NGL LABS LLC; and DOES 1 through 50, inclusive, by Nob6 on Scribd

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