Clubhouse spirit is fading, but Andreessen Horowitz is not let down

The audio app Clubhouse was furious earlier this year, but there are signs that the buzz around it is starting to disappear.

In February, Tesla CEO Elon Musk and Facebook CEO Mark Zuckerberg jumped into Clubhouse within days of each other when the social chat app began to take off.

Musk even asked Russian President Vladimir Putin if he wanted to join him for a discussion on the platform. But fast forward to today, and some of the hype seems to have disappeared.

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 is backed by renowned 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.

Clubhouse confirmed on Sunday that Andreessen has led a new series of C-funding rounds after The Information announced the news on Friday. The latest investment round, which includes new supporters DST Global and Tiger Global Management, reportedly values ​​the company at $ 4 billion. But investors look more positive than many of the app’s users.

While some people were desperate to get a clubhouse invitation, some users who are already on the platform may not see the long-term appeal. Clubhouse, 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 receiving a clubhouse and trying it out fell away,” social media analyst Matt Navarra told CNBC.

One of the most important aspects of Clubhouse is that there are no relevant conversations or rooms that users see when they open the app.

“I tried to get into that a little bit, but the only rooms that showed it to me are run by the kind of people who call themselves ‘big hackers,'” one user told CNBC “before everyone else.

Navarra said that Clubhouse’s challenge is “to make sure you discover very good rooms and speakers every time you open the app.”

He added: “The issue of content quality is only going to get tougher as more users are added and quality content diluted. Just like when Meerkat users started seeing endless boring live streams, Clubhouse is full of spam, scam and sellers of snake oil. . “

Timothy Armoo, CEO of Fanbytes, a company that helps brand brands through social videos, told CNBC that “the right people at the right time show the right things” is a “difficult problem” and that it can not enlarge.

“The elitists left the building. Marc Andreessen no longer does things. The allure of Clubhouse was that you could almost eavesdrop on interesting convoys of interesting people. What’s the point if the interesting people are gone?”

Armoo ​​noted that the buzz around clubhouse is also waning as people can now go outside as Covid’s restrictions are eased in countries such as the UK and US.

Despite initial fanfare, Clubhouse was downloaded only 14.2 million times by April 14, according to data shared by the app tracking company App Annie with CNBC. Meanwhile, social platforms like Facebook, Instagram, YouTube and Twitter boast billions of users.

According to an App Annie spokesperson, downloading of clubhouses is slow. “As with most app launches, there’s always a big download going down in the first few weeks,” she said.

By comparison, TikTok has been downloaded 500 million times in the five months to April 2020, bringing the total downloads to 2 billion, according to app analytics firm Sensor Tower. Elsewhere, the augmented reality mobile game Pokémon Go was downloaded 500 million times within a few months of being launched, according to research firm Statista.

Some clubhouse users who arrange events in the app have started looking at alternative options.

Sara Essa, creator of Sustainability Hub, which offers weekly events for its 41,400 members in Clubhouse, told CNBC that she is considering another platform.

“I try to get my community off the platform and host our talks elsewhere,” says Essa, who claims that Sustainability Hub is the largest climate community on Clubhouse.

She said “people are leaving” fast because Clubhouse has changed the algorithm and that she accuses the firm of not listening to user feedback.

Finding a new platform is Essa’s “biggest obstacle at the moment”, but she is considering the online app App Hopin, which has a valuation of $ 5.65 billion, even though it is less than two years old. She is less eager to use Twitter’s rival to Clubhouse, Twitter Spaces.

“Twitter Spaces will not work,” she said, adding that she is not a big fan of it. “A lot of people don’t use Twitter, so it will alienate a lot of people.”

Meanwhile, Mike Butcher, editor-in-chief of tech news website TechCrunch and host of ‘The Tech Media Weekly Wrap’, hit clubhouse in favor of Twitter Spaces last month. The invasion, however, was of short duration.

“People – I think we should go back to our old haunted house,” Butcher told speakers he invited to the show via Twitter after presenting just two events on Twitter Spaces. “I would totally return to Twitter Spaces later if they’ve ironed out the bugs and added Android, but there are a number of issues.”

Twitter Spaces not only crashed for Butcher’s speakers, but it also crashed for him, dropping the entire show. “It ended the room!” Butcher told speakers during one live event. “Had to start the whole room again! Lost audience!”

He also criticized Twitter Spaces for: low sound quality; an inability to “discuss” or plan a space, thus making it difficult to promote; and a low number of numbers compared to clubhouse. He was about 40-50 on Twitter Spaces versus 150 plus in Clubhouse. Twitter did not immediately respond to a CNBC request for comment.

“It’s clear that the ‘shiny new thing effect’ has disappeared with Clubhouse after a while,” Butcher told CNBC. “There are just so many random, poorly composed discussions that people can take. That’s why I moved my regular program to Twitter Spaces to go ‘new’ about novelty, given how mainstream Twitter is. Although we interrupted the experiment due to technical issues, I think we’re back. Clubhouse will have to climb out of its click-like culture if it is to succeed. ‘

Earlier this month, Bloomberg reported that Twitter was also looking to buy Clubhouse for about $ 4 billion. This came a few days after Bloomberg reported that Clubhouse was in talks about financing investors in a round that would value the business at about $ 4 billion.

And there could be more competition.

According to reports, Facebook is working on its own clubhouse rival. 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 reportedly working on competing products.

Technical analyst Benedict Evans, a former partner of the enterprise Andreessen Horowitz, told CNBC that ‘drop-in audio chat’ could eventually be used everywhere in the same way that ‘stories’ became ubiquitous on social media platforms. has.

“But the network you add is important, and is not interchangeable, and the mechanics of connecting it may be more important than the format – that’s why TikTok works,” he said in an email.

“Facebook can add ‘stories’ to everything, but they can not add ‘TikToks’ (AKA Reels) to everything, because the point is the consumption model and the network, not ‘short portrait video’. The same (is true) for audio chat – the point is how you do it and to what network you connect it, not just to add live audio, it’s like saying ‘Facebook will add status updates so that Twitter is dead’ – the point is the network. ‘