You may have only recently heard of Clubhouse, but odds are it seemed like everyone around you already knew it by then. The invitation-only, drop-in, drop-out audio chat platform has attracted many millions of fans with big names in entertainment, business, and technology counted among them.
The app that, in all likelihood, you only just found out about was recently valued at a staggering one billion dollars — you know, nine digits — meaning that heavyweights are already betting big Clubhouse to be the next social media giant despite being, really, so profoundly new.
What is it about Clubhouse that has users practically tripping over themselves for an invite, institutional investors already salivating in anticipation of another big social media platform, and many others all-caps raging online at what they believe to be nothing more overblown hype?
Related: 4 Ways To Get Clubhouse Invite
How Much is Clubhouse Worth?
The answer to the question of how much Clubhouse is worth really boils down to a few factors. Down below we’ll make the distinction between how much clubhouse is valued at, the timeframe for its atmospheric rise in value, and why investors are so excited about Clubhouse.
The Road to a Billion-Dollar Valuation
Last December, right before the app really started making mainstream waves, it reached a 1 billion dollar valuation during the second round of funding led by investment firm Andreessen Horowitz. But investors were excited about Clubhouse well before it started to attract the legions of fans it has begun to command.
Before Clubhouse had even a single user, it had already become the bell of the ball in Silicon Valley, so much so it was the subject of a VC face-off between leading firms Andreessen Horowitz and Benchmark, pitting them against each other in a bid to back the then unproven, still-conceptual live podcast app. Andreessen Horowitz eventually beat out Benchmark with a bigger offer, staking $100 million on Clubhouse — an unusually high number for an app still hanging on the vine.
Related: How To Create a Group on Clubhouse
And Benchmark wasn’t Andreesen Horowitz’s only competitor either; numerous other investment groups, VCs, and angel investor syndicates had attempted to woo Clubhouse and failed. It was this bidding war that had Clubhouse sitting pretty at the center, watching huge investment heavyweights beating each other over the head with sacks full of money to get in on many considered a strong contender for the next major paradigm shift in social media.
But, seriously, what was it that Silicon Valley saw in Clubhouse?
Related: Is Clubhouse Black-Owned?
Why is Clubhouse Worth So Much?
Right Time, Right Place
While the global pandemic has laid waste to large swaths of the global economy, it left the board open to new, more adaptable competitors. Businesses that depended on brick, mortar, and heavy foot traffic were decimated by the extended lockdowns of 2020, while digital businesses, propelled by a hunger for at-home entertainment and better ways to engage with others from afar, soared like never before.
Video games, online streaming, and social media have all seen huge boosts during the pandemic, paving the way for further innovation in the socially distant entertainment space.
This interested not only investors, looking to get in on the emerging trend, and encouraged developers to help satiate the hunger for more interactive chat platforms than Zoom or Discord. Clubhouse seemed like the perfect answer to that — its lack of a text-chat option and full-blown emphasis on audio-only chat provided something of a networking event for the entire world right when people needed it most.
Related: How To Search a Clubhouse Room for Someone
The Growth of Audio
In recent years, there has been an increasing shift towards podcasts and long-form audio consumption. Indeed, with podcast heavyweights like Joe Rogan signing hundred million dollar deals with Spotify, more and more investors are waking up to the idea that the future may not belong only to the more sensory-stimulating mediums like video and VR, but there will always exist an appetite for audio-based programming.
Clubhouse caters to this emerging taste in a new way. With many podcasts garnering as much, if not more, attention and viewership as mainstream, high-overhead cable giants, it’s clear that people want more podcasts.
Many names have been made through podcasting, and many of those names quickly found a home on Clubhouse which operates something like a “podcast theater” with viewers able to sit back, listen, and take part in live discussions.
Investors saw great potential in an app capable of injecting novelty into a medium at the beginning of an immense resurgence and think Clubhouse could be the unicorn that accomplishes this feat of innovation.
Related: How To Report on Clubhouse
Serious Engagement
One of the other most salient characteristics of Clubhouse is just how long users are engaged with the app at a time. Because of the nature of long-form audio content and podcasting, users are more likely to stay longer.
Social media apps trade in the currency of user attention, and with that attention span shrinking rapidly on most platforms, with users becoming more and more desensitized to the dopamine-targeting designs of well-entrenched industry giants like Facebook, Instagram, and Twitter, any platform even remotely capable of reinvigorating a drowsy userbase and commanding attention for sometimes hours on end is a veritable goldmine for advertisers and those in search of more and more engagement.
Related: How To Create a Group on Clubhouse
Big Name Endorsement
On Clubhouse tonight at 10pm LA time
— Elon Musk (@elonmusk) January 31, 2021
While Clubhouse shows some fundamental promises in its design and value proposition to its users, it also benefits from a savvy marketing strategy that made use of some serious name-dropping and bona fide A-list celebrity endorsement to help fan the flames of hype for itself.
With highly publicized early adopters like Kevin Hart, Elon Musk, Oprah Winfrey, Kanye West, and even the Rock, combined with the air of exclusivity that comes with an invitation-only setup, people began clamoring for a chance to get in on the action like shoppers lining up outside of a Best Buy on Black Friday – even now, with Cubhouse announcing that they would consider dropping the invitation-only limitation in the coming months and its membership already numbering in the millions, people are still selling invitations for as much as $100 on social media.
Indeed, the Clubhouse marketing strategy made good use of the FOMA psychological phenomenon.
Related: How Does Clubhouse Waitlist Work?
How Clubhouse Makes Money
So it’s clear that Clubhouse was the right app at the right time, giving listeners exactly what they needed, that it could command the unwavering attention of millions for hours on end — and that they knew exactly how to strut their stuff and market itself to unbelievable hype levels in no time. But none of that means anything to investors if those attributes cannot be turned into money — and lots of it.
After all, the entire point of a 1 billion dollar valuation is that belief is that the company has the potential to generate that much value and then some.
This might seem odd, considering Clubhouse currently generates zero revenue for itself. But Clubhouse has plans to introduce monetization strategies like subscription options that accompany membership-only perks like YouTube’s Join feature, transaction fees, advertising, and more.
Andreessen Horowitz and the other investors that helped pour in $100 million of funding last December believe that Clubhouse can use these strategies to transmute the attention it has already brought itself into billions of dollars for them. Hence, the somewhat ridiculously-seeming net worth for the app!
What do you think of Clubhouse? Next big social media giant or just a passing phase? Did Andreessen Horowitz drop the ball here? Let us know what you think of Clubhouse and the state of social media in general!
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