Silicon Valley’s hottest social app right now: just 1,500 users, valued at $100 million

Beijing time on May 21, according tomedia reports, if you listen to the social media app Clubhouse on Monday night, you may hear a heated discussion about how the new corona virus affects the prison population. Speakers for the discussion included rapper MC Hammer, political commentator Van Jones, writer and activist Shaka Senghor, venture capitalists Marc Andreessen and Ben Horowitz.

Despite the name, only about 1,500 people, most of them linked to well-known technology investors, now have access to Clubhouse chat rooms.

Clubhouse, the most popular new social app app in 2020, is valued at $100 million after Andreessen Horowitz raised $12 million. The app doesn’t have its own website, and founders Paul Davison and Rohan Seth are still out of the media spotlight. Their LinkedIn profile shows that earlier this year, they founded Alpha Exploration, the parent company of Clubhouse.

Some users who are using the current exclusive Clubhouse beta say the Clubhouse experience is a mash-up mode where you can listen to podcasts while scrolling through Twitter feeds and attending remote meetings.

After launching Clubhouse, people will see virtual rooms where the names of the participants are displayed. Sometimes there are only two participants in the room, and sometimes there are 100 participants. When people enter a room and turn on the audio switch, they can hear someone else talking – it’s like walking into a conference room where a panel discussion or question-and-answer session is going on. The creator of the room can decide who has the right to speak.

Bilal Zuberi, a partner at Lux Capital, a venture capital firm, says Clubhouse is the only social audio app that interests him.

“Almost all of social media requires people to stare at the screen,” Zuberi said. “This is the first social media app I don’t need to stare at the screen. Although I’m involved in social media, my children and I usually just sit around, keep quiet and don’t talk, which is fine. “

Clubhouse has strict restrictions on inviting users, and only a dozen new people can join each day. People familiar with the matter said the average daily number of users is now about 270, or about 18 percent of the total number of registered users. Founder Davison usually spends a few minutes in a room asking participants for feedback on a particular feature.

Zuberi said an Uber executive invited him to join Clubhouse a few weeks ago. He now spends about half an hour a day listening to the conversation series above, sometimes participating in it.

He was one of about 100 users who listened to a discussion monday night on race that focused on the views of MC Hammer and other prominent people. Ben Horowitz’s wife Felicia Horowitz, who is also the founder of the Horowitz Family Foundation, also took part in the discussion, writing on Twitter after the event: “Clubhouse is so great! “

Silicon Valley's hottest social app right now: just 1,500 users, valued at $100 million

“July, either death or success.”

In Silicon Valley, where many of the world’s top entrepreneurs claim to be trying to solve some of the most complex challenges in the universe, social media apps are an endless source of jokes and absurd sources of value creation in Silicon Valley.

For nearly 20 years, start-ups have been looking for novel ways to help people connect with friends, peers, celebrities and strangers. Most of these start-ups are bankrupt, but a few of the winners – Facebook, Twitter, LinkedIn (now part of Microsoft), Snap and Pinterest – have generated billions of dollars for founders and early investors.

This is an industry that either prospers or ends up going bankrupt. Revenue comes mainly from advertisers, and success depends largely on the so-called web effect: three new users per user and three more for each new user. Either be a winner in life like Facebook, or you fail like Friendster. In many cases, these apps are nothing more than a sinothing craze, such as Yik Yak, an anonymous social app tailored to college students, that went out of business after raising more than $70 million. Or the Yo app, which allows users to send a simple word message, is more of a botched shanzhai app than a useful tool. Also like Chatroulette, an anonymous video chat app, set off a brief cultural boom in 2010 but later collapsed as users used unwelcome nudity.

Josh Felser, co-founder of freestyle, a venture capital firm, expects Clubhouse to face a similar dual outcome.

“Clubhouse either disappeared in July or grew into a big guy,” Felser said. He himself spends an hour a day on the app. “People are now locked up at home, so now is a good time to launch the app. But I don’t know if it’s sustainable. “

Today, most of Clubhouse’s activities take place when a celebrity enters a room and informs his followers. Celebrities could be MC Hammer, comedian Kevin Hart, actor Jared Leto or hip-hop artist Fab 5 Freddy. Ben Horowitz, who has close personal ties to the hip-hop community, says his company’s goal is to bring these celebrities to the platform.

Horowitz tweeted Monday that Chris Lyons, head of the Andreessen Horowitz Cultural Leadership Fund, and Naitan Jones, a partner at the company, “brought more people to Clubhouse than anyone else.”

A spokesman for Andreessen Horowitz declined to comment, and Davison said he had not been interviewed.

In April, Matt Brezina, an investor from San Francisco, heard about it from his friend Nate Bosshard, a co-founder of fitness start-up Tonal, and then joined Clubhouse. Brezina has now become an avid Clubhouse enthusiast, often opening the app app after receiving notification that someone he follows has entered or created a room. He listens to shows while cooking or lying in bed, and describes Clubhouse as an “AirPods social network.”

“I use the app so often that my wife sometimes asks, ‘Are you in that app again?'” says Brezina. He listened to chats about child support and Biden’s presidential campaign strategy while he was sheltering at his home. “The app is so simple, but it’s a powerful platform for people to communicate honestly. “

After reports of financing at Clubhouse surfaced over the weekend, critics asked on Twitter whether the app was just the latest toy for techmakers.

Del Johnson, a former Google and Oracle employee, said on Twitter that he had been invited to Clubhouse three times, but had not joined, on the grounds that he “hated exclusive clubs whose exclusivity was not based on anything tangible.” “Del Johnson is currently investing in start-ups. While Clubhouse’s supporters argue that the app would be worth billions of dollars if it were to be successful, critics say the valuation of the app is absurd.

Can Clubhouse expand its user base?

Clubhouse’s next big challenge before considering revenue will be opening the app to thousands of people without messing it up. Some program categories naturally fit this goal, such as comedy, colloquialism, poetry, and music, because artists can create rooms and immediately pull their fans into the room to start performing live.

“The remaining question is ,'” Austen Allred, chief executive of Lambda School, a technology skills education company, said in an email. “I don’t think anyone knows the answer clearly. However, I am optimistic that it will become bigger. With hundreds of millions of people using Twitter now, I don’t think Clubhouse will be like Twitter in the future. “

Allred said he listened to Kevin Hart and Andreessen’s talk show and said he had begun to focus monday on “the reality of black people in America.”

Bobby Thakkar was one of the first hundred users to join Clubhouse and a member of a group of 40 people calling himself “the back seat of a bus.” They open a room at Clubhouse every night and often talk until 4 a.m. to talk about some of the more ridiculous topics, but they’re not about the tech industry. The group, for example, spent part of the night discussing internet domain names for celebrities who don’t own their own websites. “An hour later, we bought 150 domain names,” Thakkar said, jokingly writing on his LinkedIn page that he was a partner at “bus back seat” capital firm. “I don’t know what we’re going to do with these domain names, but That day I spent $50 on them for no reason. “

Still, Thakkar is serious about the future of Clubhouse. He thinks the app will eventually be a good target for Spotify, which has a strong library of music and podcasts but lacks social elements. If Spotify eventually buys Clubhouse, comedian Joe Rogan, who has millions of listeners, could use Clubhouse for live discussions on his podcast, or Hart could spontaneously start performing for his fans.

Importantly, people don’t have to worry about their looks when using the app (because of Clubhouse’s audio social features). “In the video, you have to stand in front of the computer, you have to shave, you have to look mental,” Thakkar said. “I can use the app app while I’m running, and a lot of people use it while playing Peloton. For those who attended the zoom meeting all day, it sounds appealing.