Behind Clubhouse's $4BN Valuation 👋 💸

Today, we analyze Clubhouse, the viral audio-only social app, and dissect its DNA to see how it’s altering social media.

             
                                                      Jakub Porzucki/NurPhoto via Getty Images

The Origin Story

Clubhouse started as many social media apps do, after years of iterations and false starts pitched across all of Silicon Valley. Paul Davison, the cofounder, previously launched the location-based social app Highlight (which sold to Pinterest) and later, along with Clubhouse co-founder Rohan Seth, the podcasting app Talkshow (which shut down after 6 months). After an angel seed round of $1M, longtime Davison-believer A16Z led a $12MM Round A.

Exclusivity worth billions

The invite-only app launched its beta in April of 2020 and was already turning heads with a $100MM valuation. Only about 1,500 people had access at the time, but many of those early members had clout, including MC Hammer (107K followers), Van Jones (4.2MM), & Gayle King (Oprah’s bestie, at 4.1MM followers as of 5/19). Fans loved that they could hop on to live conversations from thought leaders on topics from tech, to politics, to mental health, without needing to stare at screens. It was like a podcast and Twitter feed rolled up into never-recorded, never-transcribed, candid conversations.
 

With the app launching to Android in the U.S. earlier this month and going global on Friday, the app is quickly moving away from its ultra-exclusive origin. Already Reddit subthreads devoted to the app are citing too many fake influencers and salespeople taking over & others questioning if the app is losing its way as more people join (several commenters were quick to call out this line of questioning was a veiled message against a growing POC user base). The app saw a sharp decline in downloads in April, with 900k fewer than February’s peak of 9.6MM. Unphased, A16Z led an undisclosed Round C in April, ramping the valuation up to $4BN.

Attack of the clones:

These apps are getting their mics ready with audio-only functionality. The question will be whether these established social platforms will be able to take share from Clubhouse.

• Facebook is launching Rooms, as an add-on to its platform by summer.

• Twitter is currently testing Spaces, an audio-only feature that will appear on the user’s feed.

• Reddit unveils Reddit Talk, another clone, but with bonus emoji reactions.

• Telegram, the social media app out of London, will be releasing its own version.

• Spotify acquired Betty Labs in March, creators of the audio app, Locker Room.
  
  What do you think about Clubhouse? Email nstokeld@privco.com to give your opinion on the app.