In the span of less than a year, the new audio-only social media platform, Clubhouse, increased its valuation tenfold. At the end of spring 2020, with just 1,500 users, Clubhouse was valued at $100 million after receiving funding from one of the biggest VC firms in Silicon Valley, Andreessen Horowitz. In January 2021, the same investors led a financing round that valued Clubhouse at $1 billion — making the social media startup who currently boasts roughly 2 million weekly users a certified unicorn.
So, what makes Clubhouse so different from other social media platforms? Clubhouse lets users connect via audio chat rooms which are essentially live podcasts that can allow other users to join in on the conversation to discuss anything and everything. Some users have accredited Clubhouse’s success to its ability to create an environment that is more personal than text-only platforms but not as invasive as video chat.
At this point, you might be wondering why you’ve never heard of this app before. Well, that’s because Clubhouse is exclusively on iOS and the only way to join is by being invited by other users. Once a user joins the app, they receive invitations of their own to give out. Clubhouse does let non-users reserve usernames, however, and there are invitations being sold on sites like Etsy and eBay. It’s likely that the app will eventually open up its doors to the public — and even develop an Android version — but, as of now, the app remains closed off to the unlucky masses who are unable to obtain an invite on their iPhones.
Clubhouse’s success has not gone unnoticed. In the social media world, imitation is the greatest form of flattery, and Clubhouse should feel quite flattered as Twitter, Facebook, and even Mark Cuban attempt to develop audio-based chat rooms of their own. Twitter is currently in the process of developing its voice-chat rooms called “Spaces” in order to keep up with the rise in popularity of Clubhouse.
To be fair, Clubhouse is far from the first to create a social media platform centered around voice chat. Discord, which gained its popularity by catering to the gaming community, has been a major player in the audio chat room space for some time. Discord has significantly grown its usership since its initial release in 2015, and recently doubled its valuation to $7 billion in a Series H round at the end of 2020. The major success of audio-based platforms like Clubhouse and Discord may be a sign of what direction social media will be taking in the years to come.
Despite not being the first or biggest audio-focused social media platform, Clubhouse certainly has momentum on its side — and sometimes that’s all it takes. The app has received so much hype, in fact, that the Economist reported that after Elon Musk announced on Twitter that he would be joining Clubhouse “the share price of Clubhouse Media Group soared by 117%.” Unfortunately for those investors, Clubhouse Media Group is a completely different company located in China. While Clubhouse, the social media platform, is not yet a publicly traded company, the level of attention brought to the app by its high-profile users such as Mark Zuckerberg, Drake, and Robinhood CEO Vlad Tenev is sure to help the startup raise cash.
Clubhouse is likely to bring in even more celebrities and influencers as it plans to add monetization for content creators through subscriptions, tipping, and ticketed events. But with more users comes more problems. Live audio makes moderating and regulating content all the more challenging — especially as the risk of hate speech, abuse, and misinformation increases with every new user. Paul Davison, the CEO of Clubhouse, has stated that Clubhouse has strict guidelines on hate speech and trained moderators who can step in and end a conversation that violates Clubhouse policies. However, moderating these talks are easier said than done as many users have noted various instances of hate speech and misogyny taking place on the app.
Clubhouse has a promising future, but it still faces many challenges as it avoids becoming the voice chat version of Parler all while competing with well-established platforms like Facebook and Twitter who are capable of swallowing their competition.