Buzzy Silicon Valley social media app worth $100 million

MC Hammer Tuesday January 28, 2020

Nathan Congleton | NBC | NBCU Photo Bank

If you listened to the Clubhouse app on Monday evening, you might have heard a lively discussion about how the coronavirus affects the prison population. Speakers included MC Hammer, political commentator Van Jones, writer and activist Shaka Senghor and venture capitalists Marc Andreessen and Ben Horowitz.

Despite the big names, only about 1,500 people, mostly linked to leading technology investors, had access to the chat.

Clubhouse is the buzzing new social app of 2020, freshly valued at $ 100 million after a reported $ 12 million in funding from Andreessen Horowitz. There is no website yet, and the founders, Paul Davison and Rohan Seth, stayed out of the press. Their LinkedIn profiles indicate that they started Alpha Exploration Co., the parent company of Clubhouse, earlier this year.

Members of the exclusive beta group describe the Clubhouse experience as a mix of listening to a podcast while browsing your Twitter feed and attending a conference from a distance.

When the application is launched, they see some virtual rooms with the names of the people there. Sometimes there are two participants, sometimes there are 100. When they enter a room, the sound turns on and they can hear people talking – it’s like entering a conference room where a panel or a question and answer session takes place. The creator of the room can decide who will speak.

Bilal Zuberi, partner of the venture capital company Lux Capital, said that Clubhouse is the only social audio application that has captured its interest.

“Almost all social media forces us to watch a screen,” said Zuberi, whose firm has offices in New York and Menlo Park, California. “This is the first one where I don’t watch a screen. I’m involved in social media but I’m sitting by the pool with my kids and as long as I’m dumb and don’t speak, it’s great.”

Clubhouse keeps a tight cover on invitations, with only a dozen new people joining a day. The average number of daily users is currently around 270, or about 18% of the total number of registrations, according to a person close to the company. Davison usually jumps into a room for a few minutes to ask participants for comments on a particular characteristic.

Zuberi said that a senior Uber executive invited him a few weeks ago. He estimates that he now spends about half an hour a day listening to conversations and sometimes participating.

Monday evening, while he was preparing dinner, he was one of a hundred people listening to the race discussion with MC Hammer and other well-known voices. Felicia Horowitz, Ben’s wife and founder of the Horowitz Family Foundation, also participated, later tweeting: “Clubhouse was amazing!”

“He died in July or it’s something big”

In Silicon Valley, where many of the world’s best entrepreneurs brag about trying to solve some of the most complex challenges in the universe, social media apps have served as both endless jokes and a source of creativity of absurd value.

For almost two decades, start-ups have been looking for new and innovative ways to help people connect with friends, peers, celebrities, and strangers. Most went bankrupt along the way, but the few successes – Facebook, Twitter, LinkedIn (now Microsoft), Snap and Pinterest – have generated billions of dollars for the founders and early investors.

It is the ultimate in boom or collapse. Revenues come mainly from advertisers, and success depends mainly on what is called the network effect: each user calls on three new people, who each bring three others. Either you are the category winner, like Facebook, or you also failed like Friendster. In many cases, all of this turns out to be a passing fad, like Yik Yak, an anonymous messaging app for students that collapsed after raising more than $ 70 million. Or Yo, which allowed users to send the simple message of a word “Yo” and worked more like a travesty than a useful tool. Or Chatroulette, an anonymous video chat application that was a brief pop-cultural phenomenon in 2010, then collapsed when users flooded it with unwanted nudity.

Josh Felser, co-founder of venture capital firm Freestyle, expects Clubhouse to face the same type of binary outcome.

“He died in July or something big,” said Felser, who estimates he spends about an hour a day on the app. “We are all locked up right now, so it was a good time to launch it. I don’t know if it’s sustainable.”

Much of the engagement on Clubhouse today occurs when a celebrity joins a room and subscribers are informed. It could be MC Hammer, comedian Kevin Hart, actor Jared Leto (speaking of washing fruit with soap) or hip-hop artist Fab 5 Freddy. Ben Horowitz, who has close personal ties to the hip-hop community, says his company targets talent to integrate on the platform.

Actor Jared Leto enters the Heavenly Bodies: Fashion & The Catholic Imagination Costume Institute Gala at the Metropolitan Museum on May 07, 2018 in New York.

Ray Tamarra | GC Images | Getty Images

Chris Lyons, head of the Cultural Leadership Fund of Andreessen Horowitz, and Naithan Jones, a partner of the firm, “put more people in the Clubhouse than anyone else,” Horowitz tweeted Monday.

A spokesperson for Andreessen Horowitz declined to comment on the story, and Davison said he was not yet interviewing.

Matt Brezina, a San Francisco-based investor joined Clubhouse in April after hearing about it from his friend Nate Bosshard, co-founder of the fitness start-up Tonal. Brezina has become an avid user, usually opening the app after receiving notifications that someone he’s following is in a room or has created a room. He listens while cooking or laying in bed and describes Clubhouse as the “AirPods social network”.

“I’ve used this app a lot, to the point where my wife says,” You’re on this app, right, “” said Brezina, who listened to discussions about raising children while she was on site shelter and president of Joe Biden campaign strategies. “It’s so simple, but it’s such a powerful platform for people to have frank conversations.”

After reports of the Clubhouse funding round surfaced over the weekend, critics turned to Twitter to ask if it was just the latest toy for tech bros.

Del Johnson, a former Google and Oracle employee who now invests in start-ups, tweeted that he had been invited to the Clubhouse three times but had not yet joined, citing his “dislike for all exclusive clubs where exclusion is based on nothing tangible. ” Other critics have pointed to the absurdity of the valuation, while proponents have argued that if it works, it will be worth several billion dollars.

Can it evolve?

Before even thinking about income, the next big challenge for Clubhouse will be to open the application to several thousand people without cluttering it up. Certain categories are naturally suitable, such as comedy, spoken word, poetry and music, as artists could create a room and instantly attract their fans for a live performance.

“The remaining question is” can it evolve, “said Austen Allred, CEO of the technology skills education company Lambda School, in an email. “I don’t think anyone knows this answer clearly. I can imagine it is evolving, however. There are hundreds of millions of people using Twitter and I have my little corner to which I pay attention. I can’t see why that may not be true for Clubhouse. “

Allred said he had listened to sessions with Kevin Hart and Andreessen, and said he was listening to Monday’s discussion “about the realities of being a black man in America”.

Bobby Thakkar was among the few hundred members and is part of a group of around forty people who call themselves “the back of the bus”. They open a room every night and often chat until 4 a.m. on a number of ridiculous topics, but not specifically on the tech industry. Thakkar said the group spent part of the evening talking about the Internet domains of famous people who did not have the websites by name.

“An hour later, we bought 150 domain names,” said Thakkar, who is currently between two jobs in Texas and jokingly wrote about his LinkedIn page that he is a partner of Back of the Bus Capital. “I have no idea what we’re going to do with them, but I spent $ 50 that day for no reason.”

Yet Thakkar has given serious thought to the future of Clubhouse. He believes that it will ultimately be a good acquisition target for Spotify, which has solid libraries of music and podcasts but without any social element. Comedian Joe Rogan, who draws millions of listeners to his podcasts, could start a live chat, or Hart could spontaneously start performing for his fans.

Above all, no one has to worry about their appearance.

“On video, you have to be at the computer and you have to shave and look great,” said Thakkar. “I was on the app during the races, and a lot of people are on their Platoon.”

After a full day of Zoom meetings, it looks pretty attractive.

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