Bursting the Clubhouse Bubble

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While most Silicon Valley social media startups disappear, Clubhouse has emerged as the talk of town with over six million users and a valuation of 4.2 billion dollars. Let’s explore how Clubhouse has become a global leader and evaluate whether the app’s growth is indicative of an upcoming trend or merely a superficial hype.

Clubhouse’s soaring growth began last April after raising $12M with a $100M valuation, just a month after its launch. Today, the platform has become the talk of town with over ten million users from luminaries, including Elon Musk, Mark Zuckerberg, and Oprah, and students at Cupertino High School. The company attributes its success to their application’s unique capability in facilitating thoughtful discussions while multitasking. 

Said Parth Ramolia, a CHS senior, “Clubhouse offers my eyes a break from social media use.”

Said Roy A., also a CHS senior, “The platform facilitates a diverse array of perspectives and its audio medium facilitates thoughtful discussions compared to social media apps like Instagram and Facebook.”

However, critics argue that Clubhouse’s growth is a temporary hype, supported solely by influential firms. They believe that the app’s goal, creating spaces for insightful discussions while saving time, is unmet as users report that neither do the app’s unique capabilities unfold new insights nor do they save time. 

While CHS senior Shan Patel appreciated the unique medium at first, he revealed that he deleted the app after a week.  

Said Patel, “The discussions became quite dreary.” 

He further expressed that the Clubhouse experience is rather chaotic after joining a Clubhouse space with 50 people. This sentiment is ubiquitous among its user base as demonstrated by its low retention rate and over 90% decline in downloads. 

Most social media applications fade, like trends, due to social media juggernauts like Facebook and Twitter replicating their features. However, Clubhouse’s growth seems to have been spurred by none other than power player venture capital firm Andreessen Horowitz, revealing the bubbles influencers and access to capital can create. Critics indicate that the superfluous valuation of $100M just a month after launch epitomizes the two former startup executive’s access to capital. Today, the pre-revenue company has raised more than $100M to date at valuations greater than billions of dollars by one venture capital firm, bolstering the argument that the platform is primarily driven by hype. Andressen-Horowitz partners also hosts events on Clubhouse with luminaries during momentous times, significantly augmenting its growth. Earlier this year, during the GameStop squeeze, Andressen Horowitz General Partner Sriram Krishan hosted Elon Musk and Robinhood’s CEO, Vlad Tenev to discuss Robinhood’s controversial decision to freeze GameStop trades and the app instantly acquired tens of thousands of users.   

Will this trend endure? Well, only time will tell – however it doesn’t seem conducive, users are quitting and the conversations are moving to Twitter Spaces and Messenger Audio.