Insights & Advice


Clubhouse comes of age

The latest entrant into the social media orbit is an audio-only chat app called Clubhouse. The internet company had a $1 billion valuation even before it had a business plan. That is even more surprising, since membership is by invitation only.

On January 24, 2021, the company announced its latest $100 million fundraising effort and, for the first time, presented a rough sketch of how it plans to start generating sales. Its founders, Paul Davidson and Rohan Seth, are hoping to offer paid subscriptions, ticketed events, and other schemes to turn the site profitable.

You need to know an existing member to get an invite to join Clubhouse. Once you become a member, you can join the conversation on a variety of topics. Everything from cryptocurrencies to the latest sports games to any other topic you can imagine.

So, who, you might ask, would want to pay just to have a conversation with someone? Well, it might depend on who was doing the talking. What if Elon Musk or Mark Zuckerberg, Oprah, or Drake were the guest speakers?

The site’s virtual rooms are organized into a host, moderators, and audience members. The host and moderators determine the conversational flow, and who can speak and when as well as a question-and-answer segment if applicable. It is quite like any virtual panel discussion you might attend through Zoom or GoToMeeting. However, this is an audio-only event with no videos.

Each event or topic may be different. And if, for example, the subject matter is performance-related, as in acting or presenting a comedic routine, or the message is designed for listening-only, then the panel member may not allow audience feedback or Q&A.

To date, there are about 180 investors, including several large venture capital firms and a group of smaller, independent investors. There are an estimated 6 million registered Clubhouse users, which continues to grow by leaps and bounds.

Clearly, the formula for success is providing the membership a growing list of “influencers” who are loyal to the site. Tesla CEO Elon Musk made his first (and only) appearance on the site on January 31, 2021 and is credited with single-handedly driving membership from 3 million to more than 5 million users worldwide in a matter of days.  New members sprouted up in Southeast Asia in Taiwan, China, Hong Kong, and Japan.

Much of the credit for the app’s early success lies with a group of talented, Black artists, who transformed a geeky tech hangout into something more that would appeal to a much wider audience. The founders are betting that you will not only be attracted to Clubhouse’s exclusivity but will also be willing to pay for a seminar by a famous influencer on topics like the future of coronavirus. Or watch the Clubhouse production of “The Lion King.”

But success does not come without a price. Clubhouse, in its earlier moments, had its fair share of hate speech, nasty conversations and verbal harassment of speakers, moderators and audience members. Since then, the company has developed their own set of community guidelines as well as “block,” “mute,” and “report” buttons.  Some of Clubhouse funds are now used to hire more professional moderators as well as for training for those members who host and/or moderate rooms. Given the so-called “union of these divided states”, I suspect it will become even more difficult to maintain civility in these rooms depending upon the topics presented.

The Clubhouse success has spawned competitors. Twitter recently launched a live audio feature called “Spaces,” Facebook is reported to be developing something similar and the Chinese are putting together their own version of the app.

As for me, I am still waiting for someone who is a Clubhouse member to send me an invite. I would greatly appreciate it. My email is email hidden; JavaScript is required.

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