Clubhouse’s explosive growth slowed. Its CEO doesn’t care

At times in early 2021, Silicon Valley was inundated with discussions that the Clubhouse live audio chat app was the future of social media.

After gaining traction late last year, it exploded in 2021 as the fastest growing social media app in history. It aimed to popularize audio rather than text or images as the next big social media outlet as people looked for ways to communicate in lockdowns and drew comparisons to Snap or TikTok.

But as the end of the year nears, the Clubhouse bubble appears to have burst, as the craze around the app has calmed down, downloads have dropped dramatically, and the company has faced a attack by competing products of large technology groups, such as Meta and Twitter.

Its quick CEO, Paul Davison, remains adamant that the lull is only part of the typical peak and trough life cycle of a social start-up, and that the mimic features of rivals with deep pockets have had no impact on the business “in any real way.”

Indeed, Davison is convinced that making money is not an urgent concern, despite relying on regular investors such as venture capital group Andreessen Horowitz to raise around $ 310 million. on several rounds of table. During its last round table in June, the company was valued at $ 4 billion.

“In the future, as we launch more services that allow creators to monetize, I imagine we’ll take a fee there to fund the business,” he said in an interview with the Financial Times. “But we haven’t figured out all the details of that yet.”

It’s unclear whether Clubhouse, which Davison says is “well capitalized right now,” can achieve long-term growth and prove it is more than a pandemic fad.

The plan is not to branch out beyond the audio medium, he said, rather to specialize there “as an independent business.” Davison is quick to launch more than a dozen activities that he hopes the platform can support, including “radio nights, get-togethers and dinners, corporate profit appeals, comedy shows and music festivals “.

He declined to say if the company had been approached by competitors or if it would be open for sale.

The 42-year-old former head of cryptocurrency exchange Coinlist built Clubhouse alongside fellow Stanford University graduate Rohan Seth, launching it on the Apple App Store in March 2020 from his basement as the pandemic began to take hold.

“It’s been a year already,” Davison said. “We had to go really fast. To evolve the team, to evolve the business, to evolve the infrastructure, ”he added, noting that Clubhouse has increased the number of employees from around nine in January to 90 today. .

But after dominating the app store rankings in several countries, in June – a month after its first launch on Android – Clubhouse peaked at nearly 9 million downloads, according to data from App Annie. In November, the number fell to 920,000 downloads.

“I can’t name many brands that have seen such incredible growth and then such incredible decline so close to each other,” said Pete Boyle, a marketing strategist, adding that he hadn’t heard from anyone in his network. professional talk about the application. in the past three months.

Ahead of the post, Clubhouse took issue with App Annie’s figures, which do not include downloads to tablets and do not include reinstalls or updates of apps. Clubhouse said its own data showed 1.8 million downloads in November. He declined to share download figures for other months. He also refused to share an active user number.

Davison remains indifferent. “We have gone from a single community of beta testers last year to a global network of many different communities,” he said, highlighting recent growth in geographies such as Thailand. “It’s now a big chart with different clusters developing at different times. “

He added that in the summer alone, the number of “chat rooms” created per day more than doubled, from 300,000 to 700,000, driven in particular by an increase in the number of private groups.

After declining to share a more up-to-date figure, the company later said it was “700,000+” rooms per day, adding that there had been “an acceleration in growth in recent weeks.” .

Despite this, Davison denied having sought Clubhouse’s dizzying rise in the first place, citing the decision to make the app invitation-only as a first step, until July of this year. “We never tried to grow up. We just tried not to grow taller, ”he said. “I think when you grow online communities, if you go too fast, things can break. “

Outside experts, however, remember the company as embodying Silicon Valley’s trend towards “growth hacking” – deliberately driving explosive growth through experimental and cheap digital marketing.

Andreessen, who led the company’s three fundraising rounds, helped increase its visibility, hosting regular sessions and attracting famous athletes and musicians who had become investors in the company.

“Some of this activity has been directly catalyzed by a16z,” wrote Andrew Chen, a partner at the investment firm who sits on the Clubhouse board of directors in his book. The cold start problem.

Meanwhile, early adopters of the app suffered a barrage of home screen alerts unless they turned off notifications. Clubhouse also initially forced users to allow access to their phone’s address books to invite others to the app before stopping the practice.

Concerns over Clubhouse’s data collection, including address books, have already sparked a regulatory review. French regulators opened an investigation into the company’s compliance with European privacy rules in March, and German regulators have requested more information on its data collection practices.

Clubhouse said it welcomes conversations with regulators, adding that data protection is a “top priority”. He said he does not sell user data and “only collects the data that we need to make the service work for users”.

In the near term, the company is focused on bolstering its new creator monetization features – funneling money to people who host chats on the app through in-room tips, paid private rooms, and subscriptions.

In April, Clubhouse announced a partnership with payments company Stripe as part of the push. Davison said the app could eventually start reducing those transactions, in addition to the processing fees that Stripe collects.

As a former chief executive of a cryptocurrency exchange and a proponent of decentralization, Davison says he may also be exploring ways to incorporate high-profile non-fungible digital assets and tokens into the app.

“I think the principles of control, ownership and collaboration are very much in line with how we run the business,” he said. “I am very optimistic.”

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