Why Financial Experts And Early-Adapters are Questioning the Future of Clubhouse

Joel Eisenberg

When the app was still in beta mode, it was a smash with initial members. And then many ran away.

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Clubhouse logoClubhouse

Introduction

On February 3, 2021, I posted the following article on NewsBreak: “Why Clubhouse is Poised to Become the Most Successful Social Media Platform of Them All.“ See here.

At the time, Forbes and other media outlets reported similar long-term views. Click the link for an early article on the then-new social media sensation.

Nearly four months after the posting of that article, however, many of those same outlets completely revised their outlook of the audio application that came to prominence during the height of the Covid-19 pandemic. See here for a June, 2021 Forbes piece, The Drop-In Audio App Clubhouse Is Dying. It Was Fun While It Lasted, by John Brandon.

The Beginning

San Francisco Bay Area entrepreneurs Paul Davison and Rohan Seth founded Clubhouse early in 2020. At its height in April of this year, 2021, the market valuation of the platform was announced as over $4 billion.

How did a company go from startup to $4 billion in such a brief period of time?

Celebrities and other influencers, for starters. Gayle King, MC Hammer, Van Jones of CNN, Terry Crews, Michael Ovitz … They were Saturday night Clubhouse regulars in a “room” hosted by philanthropist Felicia Horowitiz. Oprah had spent time on the app, even Bill Gates and Elon Musk made much-touted appearances. Ashton Kutcher, Jared Leto … numerous writers and producers for film and television including Oscar and Emmy winners, and politicians such as Tulsi Gabbard had taken to the then-relatively new platform.

Rappers, though, moderated some of the busiest rooms early on.

On what other social media platform could a layperson interact in real time with such public figures? Clubhouse was the only answer to that question.

The Highs

Before we get to why formerly active Clubhouse users have been rapidly leaving the platform, let us delve deeper into a brief history as to its ascent.

See this Mashable article and this LA Times piece for histories of the invite-only app, which after only the first seven months of its operation attained a $1 billion valuation, according to PitchBook.

Just over one year later that valuation quadrupled to the $4 billion figure as mentioned above.

Many initial invite-only users raved on their individual social media platforms that the concept of an audio-only app coming to fruition in the midst of a pandemic was inspired. The buzz was difficult to ignore. How many of us have longed to reach out to others while being either stuck at home and/or distant from loved ones? Most of us have phones and computers; many of us have used Zoom or an Apple FaceTime equivalent to speak to others on video.

The intent of Clubhouse, though, was to foster community and in the beginning that intent proved a masterstroke. To get there, members were able to listen in on and moderate “rooms” on any given topic.

Early bugs included poorly-moderated rooms where conversations had become overly heated and sometimes racially-provocatve. That issue had largely improved for awhile with further oversight, but soon other issues sprang from moderation that we will delve into shortly.

Including a return of the ugliness.

Presently, the app runs smoothly for the most part, but occasional technical glitches tend to pop up now and again, only to be quickly repaired.

Three qualities of the platform stood out early and made it particularly appealing to users, according to Twitter postings:

  • As earlier referenced, unprecedented access to producers, writers, and celebrities for those in the arts. Meaning, the platform was set-up in such a way where moderators of rooms could bring up listeners from the audience — by either directly requesting for them to speak, or in response to a raised hand symbol on the room’s screen — and have them interact, in a real time conversation, with the subject(s) of that particular room.
  • The platform made its debut in the midst of a pandemic, where many of us have been distant from family and friends. Though most of us have access to Zoom-type platforms and smartphones, individual Clubhouse “communities” offer widespread interaction among many people who have never met, offering the opportunity to forge new friendships and business.
  • Diversity. When early-adapting rappers and their record labels discovered the app, the majority of those who joined after them tended to be African American. As the app had grown, Asian “rooms,” LGBTQ-focused rooms, even a recent room titled “The first Holocaust survivor on Clubhouse” had been held to diverse audiences.

Listening and interacting on Clubhouse proved the platform met its early goal of fostering a community and strong sense of diversity. See here.

A quick run-down of the functionality of Clubhouse is important for those less tech-savvy among us who are currently new to the platform or are unaware of its existence. Note: For its first year Clubhouse was in beta mode and operated only on an iOS platform, meaning only those with iPhone capabilities had access. Once the platform opened to Android users, the issues faced by yearly adapters became magnified.

For those unaware, the selling points of Clubhouse when it thrived were the following:

  • Virtual rooms could be opened devoted to any topic. Arts, social issues and politics were particularly popular, and the networking within each room was for a time unmatched by any other social media service by virtue of its patented interactive abilities.
  • Specifically, listeners appeared in each room, and interacted with others within that room. Same then as now. Most moderators enforced a muted microphone policy, meaning no one could talk over anyone else. If anyone disobeyed that general rule, a moderator had it within his or her power to mute the mics themselves, and/or to send someone back to the “audience” and off the “stage.”
  • Members had the ability to host “clubs,” which are usually based on a specific topic and within which were regularly scheduled rooms under the club’s banner. Further, what happened off the platform rapidly turned Clubhouse into the new social media rage: Business.

Big business. Money was being exchanged and deals consummated. I myself fielded calls from agents and producers.

Founders Davison and Seth made the media rounds stating their goal of wanting “creators” (aka hosts or moderators) to earn a sizable income on their platform. Certain updated strategies were said to be in the works to attain that goal.

All was well … until it wasn’t.

The Fall

When Clubhouse was in beta mode and invitation-only, it was akin to the Wild West. When the dust cleared and adapters were able to utilize the platform to its potential for entertainment or business purposes, operations were mostly smooth.

By the time any entity was able to join, though, and the app was no longer invitation-only, not only was the novelty rapidly wearing off but scammers had taken a semblance of control over what had once in part made the platform special.

There was more:

  • Complaints that so-called “experts” in various fields of endeavor were sometimes charging — and receiving — up to five-figure “consulting fees” became something regularly discussed on Facebook and Twitter.
  • Oversight largely disappeared (though questionable moderators can still be reported by users). Predominately, however, unscrupulous moderators have been free to run the playground.
  • Many of the celebrities or other public influencers returned their social media attention to outlets such as Twitter or Instagram.
  • When the world began reopening following the height of the pandemic, and users were once again able to enjoy in-person events, the necessity for and appeal of an audio-only app dissipated.
  • Enflamed rooms based on political and social issues had returned and increased in intensity. When a listener utilized this aspect of the Clubhouse experience as their singular news source, all-new issues arose including threats of violence.
  • Clubhouse largely lost its “cool” factor and buzz once it’s bad press began to outweigh the good, and outlets such as Twitter, Facebook, and others mimicked its design and capabilities. See here.

Other factors of late have led to questions regarding whether the platform can return on its continued investments. Time will tell.

In Conclusion

Like other social media platforms of note, Clubhouse is free for users, though moderators have the ability to charge for their services. The platform, unfortunately, has become diluted with frivolous and dangerous content — no different in some ways than that of other social media platforms — that will have to be closely monitored moving forward.

Money must be spent on such oversight, in addition to improving other in-app features.

Thank you for reading.

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I am an award-winning author, screenwriter for film and television, and producer. My mission on News Break is to share socially important perspectives on both culture and pop-culture. Member of PEN America, and the WGA.

Northridge, CA
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