Healofy defrauds users and VCs with unethical hacking of metrics, stains ecosystem

Numbers matter in startup world. If you are in transaction business, the number of orders, average ticket-size and GMV/GTV are precursors for investors where Daily Active User (DAUs), Monthly Active Users (MAUs) and average time spent set tone for content businesses.

When an institutional investor or VCs consider investment opportunity in early or growth staged content startups, DAUs, MAUs and engagement become the key elements that are focused upon. Large scale MAUs and DAUs have become sure-shot gateway for a venture capital cheque.

Lust for scale often creates pressure on hyper-ambitious entrepreneurs. They always look for avenues of innovative growth hacking tactics. Sometimes, they are even engrossed in chasing scale to the limit that the line between ethical and unethical turns blurry to their eyes.

And these few don’t see any wrong in even forging numbers to impress VCs. Case in point – Healofy. It has allegedly been involved in underhandedly inflating its DAU-MAU numbers. Nothing hidden from its eyes, Google’s radars blipped and it banned the app from Play Store.

For the past one week, there is no sign of the app on the Google Play app store due to the violation of guidelines. And for the second time at that. While we don’t know the grounds for this ban, Entrackr’s sources emphasised that it has been hacking user devices to inflate usage/engagement numbers 7-10 times. Not sure how they thought a leap this big wouldn’t get noticed.

According to an Inc42 report that quoted Shubham Maheshwari, CTO of Healofy – the company is performing at par with Facebook on key social networking metrics like DAU/MAU. He emphasised that the team is sitting on something crazy hot seat, especially with the network effect acting in favour of Healofy.

However, this masquerade of growth based on network effect is absolutely hollow. Entrackr’s research and sources outline that Healofy has been hacking user devices to stage fake growth to its investors. “To inflate engagement numbers, the app used to open in the background even without the user actually firing the app. This is the basic premise of Healofy’s Play Store ban,” said three sources to Entrackr.

Sources requested not to be identified as the matter is sensitive and can put them in trouble.

Further, the company has blatantly been involved in copyright violations by taking content from competitors (hacking their servers) or downloading from Youtube. “These actions were also reported to their Investors in the past by the competitors,” said two competitors of Healofy. They requested anonymity as well.

Entrackr also has seen a copy of the email sent to Healofy investors by these competitors. “The matter was also brought to notice to its largest backer Babytree when they visited India last year. However, nothing had happened,” they added.

Sources emphasised that based on fake metrics and unethical tactics Healofy had raised $8 million Series A round led by China’s top parenting app Babytree and Omidyar Network.

The firm also faced a ban from Facebook for violating guidelines by using Prime Minister Narendra Modi’s image. “In the past action has been taken on Healofy for misrepresenting itself as a government agency. Their Facebook pages were also taken down by the social media giant sometime back for similar reasons,” added sources.

Entrackr has access to screenshots that verifies the taking down of Healofy’s Facebook page over abuse of guidelines. We also have sent a detailed set of questionnaire to Omidyar. The post will be updated as it responds.

“Healofy has been working in the space of parenting, motherhood and community building for women since 2016. We have earned over 2.8 million installations of the app as well as a Google Play Store rating of 4.8/5. Our users are the core of our product and we take ethics, user privacy and data very seriously. Google has informed us of the modifications we need to make in the product to resolve this situation which are currently doing. We are confident the app will be reinstated as per Google’s procedure. Furthermore, we remain committed to staying compliant to Play Store guidelines, both current and in the future. We would like to thank all our potential users for their patience,” said Gaurav Aggarwal, Co-Founder and CEO of Healofy via an email to our detailed questionnaire.

Healofy certainly has been using unethical tactics to hack growth. Moreover, it has played with the users’ trust. The firm’s involvement in such precarious activities also raises concern about the investors – Why haven’t they paid heed to their investee company when they were intimated with these grave issues on several occasions.

The Healofy episode also passes a lesson to all entrepreneurs – don’t use unethical means to inflate scale or numbers. Remember Karma is a bitch, and it WILL come back to haunt you. Be transparent and honest to your users, stakeholders and the ecosystem. Don’t take their trust for granted and dare to trick them 🙂

*The post has been updated to include Healofy’s CEO response to our detailed questionnaire.

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