Clubhouse and the new platform generation

How a buzzy startup may be ushering in a new crop of social platforms

Feb 12, 2021

The internet’s hottest club is appropriately named Clubhouse, and, to channel Bill Hader’s beloved SNL character Stefon, it has *everything*. A live rendition of “The Lion King” musical generated buzz on the day after Christmas. Seemingly every day a new conversation on the audio-chat social networking app with a famous venture capitalist or pop culture mainstay – occasionally both – will make its way through the tech trades to mainstream media. Elon Musk swung by, as did Mark Zuckerberg, and Ai Weiwei.

Since its April 2020 launch, Clubhouse has amassed a $1 billion valuation (on no revenue), $100 million in Series B funding led by a16z, and more than 2 million weekly active users. It has also garnered a fair share of controversy, thanks to the proliferation of MLM-like rooms, little moderation, a very trigger-happy experience with a blizzard of notifications, and a dubious “audio LinkedIn” connotation.

Clubhouse is remixing a few key platform trends:

Ephemerality: Now that we’re used to content on demand, live content is increasingly becoming a rarity. Fewer in-person events, a shift to asynchronous work, and the ease of recording have created an abundance of content and removed the urgency from seeing or experiencing something at a given time, synchronously with others. Clubhouse, for now, is entirely synchronous: If you miss a discussion there are no replays or ways to revisit later; you have to be there to see it. Other platforms have disappearing content too – Snap, Instagram, WhatsApp, and Twitter each have their own version of ephemerality. But Clubhouse’s current approach is more akin to missing a one-night-only concert or lecture, so the FOMO effect is quite high.
Exclusivity: Clubhouse launched on iOS only. For the United States, this might be a viable tactic: North of 60% of consumers run iOS to Android’s roughly 38% market share. (Globally, it would be a different story: Android commands about 72% market share compared to approximately 27.5% for iOS.) The app is invite-only, requiring you to already know someone using it to be invited (although you can now reserve your username and wait for an invite). Invites for sale have popped up on various platforms and seem to cost anywhere from $15 on Etsy (!) to $125 on eBay. Once you’ve secured an invite, you can join rooms that, for now, seem to top out at 5,000 listeners. This limit is more than adequate for most rooms and ups the FOMO factor significantly for rooms where a celebrity or three may appear.

Repackaging of audio: The repackaging of audio has been accelerating for the better part of the last decade. Paid premium radio, audiobooks, streaming music, and podcasts have impacted previously robust terrestrial radio listening patterns. The pandemic drove this shift even further by disrupting in-car listening time – the last bastion of traditional radio. As we’ve seen in other sectors such as commerce and entertainment, the pendulum is swinging from distributors to platforms that connect directly to consumers. Clubhouse looks like DTC radio.
Social interaction: The app makes it easy to join a room and listen in. You can also raise your hand to ask to join the main “stage” – if a moderator approves, you can speak to the whole group. It’s implemented rather seamlessly and is much easier and more intuitive than this description makes it sound. Clubhouse gives the illusion of participation and closeness to the speakers on stage: In just a few taps you, too, can speak with an a16z partner or even MC Hammer, who’s been known to parachute into certain rooms. This type of manufactured intimacy and feeling of belonging to a clique (or a club!) is perhaps the perfect antidote to pandemic blues: We miss hanging out and experiencing things with others, and Clubhouse can at least partially fill that void for now.

First to the party

If it feels like there’s a gold rush of sorts to be an early adopter, it’s because we’ve all been through this cycle and understand the advantages of being early to a new medium and amassing a sizable following. We’ve seen it with TikTok, where the D’Amelio family is wisely parlaying its short-form fame into lucrative multimedia deals. We’ve seen it with Twitter, where folks who inexplicably have hundreds of thousands of followers get three likes and a retweet on most posts yet are able to command serious fees for sponsored content. And we’ve seen it on every other platform where the number of followers/subscribers/friends is used as cachet and a proxy for one’s influence (fraudulent followers and garden-variety bots aside).

If you haven’t already, the best way to get a good sense of Clubhouse is to experience it yourself. But buyer beware: Discovery is quite nascent, and there’s a lot of noise in the app, so it may take a few tries to find a good room. There are other growing pains. In an attempt to simplify the app’s invite-only feature, Clubhouse asks you to sync your contacts. Depending on how diligent you are about contact hygiene, that might mean some strange encounters -- like doctors’ offices you no longer frequent, your favorite restaurant, folks at work, or much more sinister scenarios (e.g., abusive exes whom you’re trying to avoid). At the time of writing the privacy policy seems nonexistent, too, which goes directly against the California Consumer Privacy Act (not to mention the EU’s GDPR). This lax approach to design seems indicative of a team that either isn’t directly concerned with documented adverse behavior on the internet or isn’t aware of it because it largely doesn’t happen to them. In 2021, it’s unclear which scenario is worse.

A post-advertising social platform

Clubhouse may be heralding a bigger shift on the horizon and a changing of the guard for social platforms. To understand why, we need to consider both the past and social platform evolution.

Today’s dominant platforms largely emerged during the desktop days of the internet. Facebook was founded in 2004, Twitter in 2006. Instagram was the first to capitalize on the shift to mobile in 2010, followed shortly by Snap as the first truly mobile-only social platform. The current generation of social apps approached advertising as the primary and default monetization option. TikTok, founded in 2016, is also embracing advertising but Douyin (抖音), TikTok’s original Chinese version, took a much more diversified approach to monetization.

Enter Clubhouse, the first post-advertising social platform. You may think we’re jumping the gun here by classifying a platform with no revenue (yet) into a category that doesn’t quite exist (yet), but we think the lines are pretty easy to connect. While creators today have to hitch themselves to individual platforms to get paid, it’s clear that their needs extend beyond single ad-based monetization streams. It’s easy to imagine Clubhouse building premium paid tiers (something Twitter still doesn’t have) with more audience acquisition and management tools, paid replays, syndication, integrated carts, donations, and many other revenue options (both for creators and the platform itself). Thinking ahead three to five years, that $1 billion valuation sounds less extreme and quite reasonable. This could be YouTube big.

While Clubhouse builds its user base, incumbents can use their distribution and existing audience footprints to roll out similar functionality. This is exactly how they’ve started to respond: imitation. Twitter is slowly rolling out Spaces, its version of on-demand audio rooms. Facebook is in the early stages of implementing its own, which was announced several days after Mark Zuckerberg’s Clubhouse appearance. Copycatting is nothing new in the land of platforms: Instagram has copied Snap so much in recent years that the running industry joke is that Evan Spiegel, Snap’s co-founder and CEO, is really serving as Facebook’s shadow head of product.

If on-demand audio (and video) is to be the next phase of social platform growth, it also bodes well to look at the underlying tools and technologies that enable it. Just as Uber proved to be Twilio’s marquee customer, the current landscape seems to favor recently-IPO’d Chinese company Agora (NASDAQ: API), an early leader whose tech enables drop-in audio. Even if you’re not sold on Clubhouse the product, real-time audio and video connectivity has many potential applications – from customer service through telemedicine to casual social connectivity (think dating during/after the pandemic) – and is worth following closely in the coming months and years.

One question:

What delineates a platform from a feature? As with Stories, on-demand audio could be an appealing feature on many other platforms. (For example, Spotify could enable intimate concerts and direct paid connections with artists.) What mix of other functionalities would make Clubhouse a destination after everyone else has rolled out their own clones?

Dig Deeper:

The Click v.2- Digital’s $80 Billion Opportunity - From IS IT AD TECH OR ADTECH? - w/ Matt Barash, Eric Franchi, Lauren Johnson, Terence Kawaja, Ana Milicevic, Eric Seufert, Jarrod Dicker, Xavier Kochhar on Wednesday, Feb 17 @ 8 pm ET /5 pm PT
Facebook starts the copying machine
New (ad)ventures in platform monetization
Oopsies with growth hacking
The trouble with moderation

Thanks for reading,

Ana & Maja

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