All About Clubhouse, a Gabfest Behind a Velvet Rope

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It’s been years since a U.S. social media platform has broken through. But in 2021, Clubhouse has become a cultural phenomenon, attracting celebrities, a $1 billion valuation and plenty of controversy. Modeled after a conference or festival like South by Southwest, users can “drop in” to audio chats focused on topics ranging from music critique to business advice. The Silicon Valley elite made up its initial audience, and they continue to have an outsized influence on the app’s environment. While still invite-only and exclusive to the iPhone, Clubhouse is expanding rapidly, and celebrated its first birthday on St. Patrick’s Day, 2021.

1. What is Clubhouse?

Clubhouse is an audio-only social media app known for its unconstrained conversations, celebrity backers and invite-only status. The experience falls somewhere between call-in radio and a professional conference. Users self-select into rooms based on interest, and engage in live conversation. Room moderators decide who is able to speak, and it’s common to see rooms with dozens of active participants. The still-in-beta app exploded in popularity at the start of 2021, reaching 8 million downloads by mid-February despite limiting enrollment.

2. Who’s behind it?

Clubhouse is the creation of two serial entrepreneurs, Rohan Seth and Paul Davison, who called it their “last try” at creating a social app. Davison’s previous app, Highlight, which connected nearby users with similar interests, drew attention at SXSW in 2012 but fizzled out shortly after. Eventually, the company was sold to Pinterest. Seth’s company, Memry Labs, created many social apps, such as Dayfie, which facilitated selfie-a-day timelapses, and was eventually sold to Opendoor Technologies Inc. in 2017. Seth and Davidson connected for the first time in 2011, after somehow never meeting while overlapping at both Stanford University and Google.

3. Why is it so popular?

Much of Clubhouse’s explosive success has been attributed to A-list celebrity co-signs: Elon Musk, Oprah Winfrey and Bill Gates have all appeared on the app. Fans have described a sense of access to public figures and thought leaders that feels different from less intimate or interactive social media platforms. Plus, content is generally non-recordable, leading some to dub the app a “FOMO machine” -- catch a session now, or it’s gone forever. Popularity in the tech and VC crowd is often linked to early and enthusiastic support by venture capital giant Andreessen Horowitz. (Bloomberg LP, the parent company of Bloomberg News, has invested in Andreessen Horowitz.) The app has also been described as a hub for Black creators like Bomani X, whose face was once featured on the app’s icon. Plus, in an era of endless Zoom meetings and FaceTime catch-ups, many have found audio-only socializing refreshing.

All About Clubhouse, a Gabfest Behind a Velvet Rope

4. What problems has it had?

The qualities that make Clubhouse feel casual and personal can also facilitate deception, critics have said. The restrictions on recording has also made Clubhouse a seemingly safe place to spread lies or bully without consequences. Clubhouse has been used to spread misinformation about Covid-19 and racist and misogynistic content. While moderation difficulties are not unique to Clubhouse, live audio presents a particular challenge in comparison with text-based competitors like Twitter or Facebook.

5. Does it have competitors?

Many companies are trying to cash in on the success of Clubhouse. Twitter Inc. has responded with Spaces, an audio-only feature, and Facebook Inc. is said to be working on a competitor. Mark Cuban and tech founder Falon Fatemi are working on Fireside, a live audio app that encourages recording, unlike Clubhouse. Although China banned the app following conversations on taboo topics, many copycats have popped up in the country, and giants such as Tencent Holdings Ltd. and Alibaba Group Holding Ltd. have begun testing audio-only chats on their platforms. On a more abstract level, Clubhouse considers itself a competitor to conferences, parties and other in-person events. This has led some to wonder how Clubhouse will fare in a post-vaccinated world, once traditional networking events are taking place -- along with all the normal forms of entertainment that once again will compete for time and attention.

6. How does it make money?

So far, it doesn’t. Clubhouse has yet to generate any revenue, despite raising at least $110 million over multiple rounds of funding, most recently in January at a $1 billion valuation. The company plans to test subscriptions, tipping, ticket sales and other ways to allow creators to make money from their club rooms, all based on the premise that people will be willing to pay for Clubhouse content. This will fund a Creator Grant Program to give stars on the platform a reason to stick around. Clubhouse says its business model will not rely on advertising, and it will not share user data with advertisers or brokers; its privacy policy was recently updated to reflect that. No one knows how big Clubhouse would have to be to become profitable, but that hasn’t deterred investors and millions of users.

7. How can I get in?

Currently, Clubhouse is invite-only -- each member is periodically allowed to invite a handful more. If you’re not one of the 10 million who’ve received an invite thus far, you can turn to the secondary market. EBay Inc. lists Clubhouse invites at between $3 and $25. The company has not set a timeline for public availability, and said it wants to grow slowly to ensure stability, safety and diversity. In a February Clubhouse interview with Bill Gates, Davison said that Android functionality is the “top feature” they’re working on.

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