On May 28, Kavin Bharti Mittal, founder and chief executive of Hike Messenger, tacitly admitted in a blog post that the company had taken a “misstep” in moving away from its “core” over the last 12-15 months, and that it would be a ‘Back to Basics’ approach in the coming year.It was an important moment in Hike’s six-year history, underscoring a belated realisation that they had, in base terms, messed up. And much of that happened after Hike joined the hallowed unicorn club — startups with a valuation of $1 billion or more — in August 2016.In the last 18 months, Hike’s monthly active users (MAUs) have halved (37 million to 18 million) and its daily active users (DAU) diminished by two-thirds (23 million to 8 million), according to app intelligence service App Annie. These numbers, if anything, indicate a company in a constant state of flux, unsure of its core audience and unable to arrest the ensuing free fall. At the heart of this decline was the conflict between Hike’s ambitions and its reality.“They wanted to be like other global products at various stages. WeChat, Facebook, Snapchat, and so many others, so much so that they stopped being Hike,” says a person aware of the developments at Hike, on conditions of anonymity as he is not authorised to speak to the media.In an email response to a questionnaire sent by, a Hike spokesperson says, “We look at the mix of activity of our user base as a core metric. We call it DAU LTV…Average time spent, also a key metric, is about 25 minutes, with the best users spending close to about 40 minutes.”Hike’s investors, including Foxconn (Hon Hai Precision Industry) and Tencent Holdings Ltd—did not respond to ET’s queries.Hike’s decline also reveals the ruthlessness of the space it was operating in — if any social media company does not evolve at fast as the market wants it to, it ends up being left behind. Or basically what is now known as the Snapchat syndrome.Pair that with network effects taking place around similar products and it starts making sense. Hike is believed to have lost most of its users to the Facebook-owned WhatsApp, which considers India its largest market, Indian language-based social network Sharechat and videosharing social network Instagram, according to company insiders.Hike’s unchecked decline coincides with the constant reshuffles within its senior management. Several high profile hires — such as Kumar Srinivasan, who joined from Nordstrom retail and Abhishek Nag, who joined from Uber — have all since left. Today, it effectively functions without a senior management.Insiders also reveal that a lot of the senior management left because Mittal was said to be resistant to changes in the product. “The ship,” as a third person aware of recent developments in Hike states on condition of strict anonymity, “was sailing in the wrong direction. Even a billion-dollar unicorn can sink, if there’s an iceberg in its way.”“No discredit to Kavin, but in India, the difference between founders and professional management hasn’t yet come in,” says Sanchit Vir Gogia, chief analyst and chief executive of Greyhound Research. “This also reflects rather poorly on investors, who should have done a far better job in due diligence and catching problems at their infancy and not when its too late in the day.”The person quoted earlier in the story says, “In a startup, the founder is always alone. He hires a lot of people to help him make decisions. And its success by and large depends on how he takes it and analyses the data he’s given. In this case, Kavin hired the wrong people, who fed him the wrong data.”Most recently, Hike announced that it would, as part of its Back to Basics strategy, lay off up to 25% of its workforce, with a significant portion of those impacted coming from its latest acquisitions — hardware company Creo and live streaming company InstaLively.In August 2016, when Hike raised $175 million in a round led by Chinese tech giant Tencent and Taiwanese manufacturing company FIH Mobile, there were ample suggestions that it would take a “super app” approach. Much like Tencent’s very own WeChat.In doing so, it would create a messenger-driven ecosystem in the mould of a Swiss Army knife, where besides chat, a user could send money, book cabs, split bills, play games et al.That, in itself, was ambitious, given that much of WeChat’s successes were because of China’s firewalled economy. And the fact that WeChat benefited from other prevailing factors such as no single app store or operating system, which meantYoungsters who do not want to show they are online, which is mostly unavoidable with WhatsApp, find the hidden mode usefulthere were multiple big apps, instead of one gorilla.While Hike has, over the last 24 months, incorporated some of these features and much more, it does not have the users to show for it. “Hike’s biggest failure was that when the big players came in, it had to find a niche and grow that niche. It did not do that,” says another person familiar with recent developments in Hike, on condition of anonymity.For the last couple of years, Hike has been following what is known as the shotgun approach in startup strategy speak — when you fire all five bullets and hope that one of them hits. This is in stark contrast to what is known as the sniper approach, which is, literally speaking, shooting straight at the head, obviously referring to better focus.The latter is something smaller startups tend to do, in most part due to lack of access to capital. At Hike, the aspiration was to fire five bullets, and get a couple of them right. What did not thecompany back was the abundance of capital, which is a tempting proposition indeed to take the shotgun approach.The pitfalls? You don’t think through the shotgun. Hike’s strategy showed how little the company knew about its target demographic. There was a clear misunderstanding of who its users are and what they want, which is a logical followthrough to an unknown target.The common hypothesis within Hike was that a majority of its users were from tier IIIII towns and cities and those who could be classified as SEC B and C. But it failed to get the right market niche. If a company is building a niche for a particular audience, say, SEC A users, it has to identify and build a niche for its core SEC C audience. This was something rival Sharechat did, and kept doing. “The metric of registered users is much like GMV. It stands for nothing. Just because someone has downloaded the app once does not make him an active user. Ultimately, it’s not even the number of active users that change the game, it is the depth of their usage,” Gogia points out.Hike’s product philosophy was essentially to build one feature for one set of audience and, without getting its niche right, quickly move on to the other. It was in a hurry.“For loyal users of Hike, people who love the product, there is use case for one person, say using it in hidden mode. And there exist multiple replicas of that one person. Ideally, Hike should have built around that audience, which is exactly what it didn’t do,” says the first person quoted in the story.Likewise, when Hike introduced its ‘Stories’ feature instead of its popular ‘Timeline,’ it resulted in a major loss of users. “It had to double down on the Timeline feature. It had to tweak its product philosophy, given that the Indian audience use the product for one case. They moved from one product to the other—payments, stories, Timeline, services — because of which they lost a lot of users,” adds the person.“Hike wasn’t able to figure out what its audience wanted. It’s like your core loyal user uses stickers and GIFs, but they want to become Instagram,” he quips.Similarly, when Hike launched a product feature which allowed users to search by name and not phone numbers, it lost a lot of its core, ‘couples’ audience.And that, to a large extent, underscores its shotgun approach.Hike today wants to build multiple apps, which is to say it will target different markets and build accordingly for each of them. Chief among the audience Hike wants to build for are what Google calls the Next Billion Users. Or, users who are likely to come online and use the internet in their native language.The other cohort could be a Snapchat-like product, with which it could target its key college-going crowd. This “constellation of apps” strategy, sources say, would involve a mix of user-generated content, for which Hike would have to build tools and publisher-generated content — Inshorts-like products for which the app would have to licence or buy content from publishers.One such app, sources say, could be a Sharechat replica, where users can create and share content in their own languages. “It might be a bit of a climbdown from their original positioning, but if executed well, they could gain decent scale,”says a product manager at a Bengaluru-based startup who did not want to be named.What could also potentially work for Hike is its experience in growth hacking, which dates back to the time it offered free talk time and short messages service to attract users. “They want to be like Bytedance,” says the Bengaluru-based professional who is aware of Hike’s strategy. He was referring to the Chinese unicorn that owns popular products such as Toutiao, Musical.ly, News Republic and Tik Tok, among others.Nonetheless, Hike continues its shotgun approach even while seemingly pressing the reset button, except that it will take multiple bets outside the app.“It will now go user first. But instead of one user, it will now look at three users. It will fire three separate bullets outside the app and hopefully, one of these apps will grow and the company will double down on it,” says a person quoted earlier.The other approach that Hike is currently considering involves investments in similar products. These investments, sources say, will be a mix of Mittal’s own personal investments and on behalf of Hike. “They’ve already started approaching startups for preliminary discussions, without any numbers,” says the Bengalurubased professional quoted above. “This is another resemblance to Bytedance.”But coming back to the big valuation question — given its missteps, how are Hike investors Foxconn and Tencent reacting to developments at the company?According to sources ET spoke to, Tencent will give the six-year-old venture a longer rope. “Tencent is prepared to give Hike more time,” says a tech-focused venture capital professional. “It has already indicated that the world’s fifth-largest internet company is prepared to double down on its bets, possibly even at the cost of profitability.”According to the Hike spokesperson, the company still has enough capital in the bank, thus providing it with a runway of over two years.“Hike still has over half the capital it raised from the last $175 million round. Thus, our runway is 2 yearsplus. This further allows us to take big risks and try new things going forward, all of which will be a focus on our core — social media and content,” says the spokesperson.But as Gogia cautions, “The pressure from investors is going to mount tremendously. The next three to four quarters is what I’ll give to a company like Hike, if it wishes to survive.”