There are signs that the buzz around Clubhouse is already fading — but investors aren't deterred
- The invite-only iPhone app, which celebrated its first birthday last month, allows users to find and listen to conversations between groups of people.
- It was quickly embraced by Silicon Valley types and it was backed by well-known venture capital firm Andreessen Horowitz in a January funding round that reportedly valued it at $1 billion.
- But some users are failing to see the long-term appeal and they're considering other platforms.
Audio app Clubhouse was all the rage earlier this year, but there are signs that the buzz around it is starting to dissipate.
In February, Tesla CEO Elon Musk and Facebook CEO Mark Zuckerberg hopped onto Clubhouse within a few days of each other, as the social chat app started to take off.
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Musk even asked Russian President Vladimir Putin if he wanted to join him for a conversation on the platform. Fast forward to today, however, and some of the hype appears to have vanished.
The invite-only iPhone app, which celebrated its first birthday last month, allows users to find and listen to conversations between groups of people. It was quickly embraced by Silicon Valley types and it was backed by well-known venture capital firm Andreessen Horowitz (whose co-founder speaks on the app from time-to-time) in a January funding round that reportedly valued it at $1 billion.
On Sunday, Clubhouse confirmed Andreessen has led a new series C funding round after The Information broke the news on Friday. The latest round of investment, which includes new backers DST Global and Tiger Global Management, reportedly values the company at $4 billion. But investors appear to be more bullish than many of the app's users.
While some people were desperate to get a Clubhouse invite, some users who are already on the platform are failing to see the long-term appeal. Clubhouse, which was founded in April 2020 by Paul Davison and Rohan Seth, did not immediately respond to a CNBC request for comment.
"I think the initial FOMO about getting a Clubhouse invite and trying it out has ebbed away," social media analyst Matt Navarra told CNBC.
One of the main gripes with Clubhouse is that there's a lack of relevant talks, or rooms, that users see when they open the app.
"I tried to get into it for a bit, but the only rooms it was showing me were run by the kinds of people who unironically call themselves 'growth hackers'," one user told CNBC, adding that it felt like social media managers arrived before everyone else.
Navarra said Clubhouse's challenge "is making sure when you open the app you discover lots of great rooms and speakers, every time."
He added: "The content quality issue is only going to get tougher as more users are added and quality content gets diluted. Much like when Meerkat users started to see endless dull live streams, Clubhouse is full of spam, scams, and snake oil salesmen."
Timothy Armoo, chief executive of Fanbytes, a company that helps brands advertise through social video, told CNBC that "showing the right people the right things at the right time" is a "hard problem" and that it can't scale.
"The elitists have left the building. Marc Andreessen isn't doing stuff anymore. The allure of Clubhouse was that you could almost eavesdrop on interesting convos from interesting people. As the interesting people have left, what's the point?"
Armoo noted that the buzz around Clubhouse is also dissipating because people can go outside now as Covid restrictions are eased in countries like the U.K. and the U.S.
Despite the initial fanfare, Clubhouse had been downloaded just 14.2 million times by April 14, according to data shared with CNBC by app tracking firm App Annie. Meanwhile, social platforms like Facebook, Instagram, YouTube and Twitter boast billions of users.
Clubhouse downloads have steadied, according to an App Annie spokesperson. "As is with most app launches, there's always a huge download in the first few weeks which tapers down," she said.
By comparison, TikTok was downloaded 500 million times in the five months leading up to April 2020, bringing total downloads to 2 billion, according to app analytics firm Sensor Tower. Elsewhere, augmented reality mobile game Pokemon Go was downloaded over 500 million times within a few months of going live, according to research firm Statista.
Clubhouse vs. Twitter Spaces vs. Facebook?
Some Clubhouse users that arrange events on the app have started looking at alternative options.
Sara Essa, the creator of Sustainability Hub, which hosts several weekly events on Clubhouse for its 41,400 members, told CNBC that she's considering a different platform.
"I'm trying to get my community off of the platform and host our talks elsewhere," said Essa, who claims Sustainability Hub is the biggest climate community on Clubhouse.
She said "people are leaving" rapidly because Clubhouse changed its algorithm and she accused the firm of failing to listen to user feedback.
Finding a new platform is Essa's "biggest hurdle right now" but she's considering online events app Hopin, which boasts a valuation of $5.65 billion despite being less than two years old. She's less keen on using Twitter's rival to Clubhouse, Twitter Spaces.
"Twitter Spaces wouldn't work," she said, adding that she's not a huge fan of it. "Lots of people don't use Twitter so it's going to alienate a lot of people."
Meanwhile, Mike Butcher, the editor-at-large of technology news site TechCrunch and host of "The Tech Media Weekly Wrap," ditched Clubhouse in favor of Twitter Spaces last month. However, the foray was short lived.
"People – I think we have to go back to our old Clubhouse haunt," Butcher told speakers that he invited onto the show via Twitter after hosting just two events on Twitter Spaces. "I'm totally up for going back to Twitter Spaces at a later stage when they have ironed out the bugs and added Android, but there are a number of problems."
Twitter Spaces didn't just crash for Butcher's speakers but it also crashed for him, causing the entire show to drop off air. "It ended the room!" Butcher told speakers during one live event. "Had to restart entire room! Lost audience!"
He also criticized Twitter Spaces for: having low audio quality; an inability to "pre-book" or schedule a Space, therefore making it hard to promote; and low audience numbers compared to Clubhouse. He was getting around 40-50 on Twitter Spaces vs 150 plus on Clubhouse. Twitter did not immediately respond to a CNBC request for comment.
"It's clear that the 'shiny new thing effect' wore off after a while with Clubhouse," Butcher told CNBC. "There are only so many random, poorly curated discussions people can take. So I moved my regular show to Twitter Spaces to go for 'reach' over novelty, given how mainstream Twitter is. Although we've paused the experiment because of technical problems, I think we'll be back. Clubhouse will need to climb out of its cliquish culture if it's to succeed."
Earlier this month, Bloomberg reported that Twitter was also looking at buying Clubhouse for around $4 billion. It came a few days after Bloomberg reported Clubhouse was in talks to raise funding from investors in a round that would value the business at about $4 billion.
And there could be more competition on the way.
Reports suggest Facebook is working on its own Clubhouse competitor. Screenshots published by TechCrunch in March suggest that Facebook's audio product will be an extension of Facebook's existing Messenger Rooms as opposed to a standalone app.
Meanwhile, LinkedIn, Slack and Spotify are also working on rival products, according to reports.
Tech analyst Benedict Evans, a former partner at venture firm Andreessen Horowitz, told CNBC that "drop-in audio chat" may end up getting used everywhere in the same way that "stories" have now become ubiquitous across social media platforms.
"But the network you add them to matters, and isn't interchangeable, and the mechanics to link them might matter more than the format — that's why TikTok works," he said via email.
"Facebook could add 'stories' to everything, but they can't add 'TikToks' (AKA Reels) to everything, because the point is the consumption model and the network, not 'short-form portrait video'. The same (is true) for audio chat — the point is how you do it and what network you connect it to, not just adding live audio. It's like saying 'Facebook will add status updates so Twitter is dead' — the point is the network."