Clubhouse Co-Founder Opens Up About Growing Pains Over Last 18 Months

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Paul Davison, CEO of Clubhouse.

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Clubhouse co-founder Paul Davison is bursting with energy when he joins the Microsoft Teams call from his home in California.

His good humor contrasts with the popularity of his audio-only chat app. Launched in March 2020, the app went semi-viral earlier this year before dropping dramatically in Apple’s App Store rankings.

“It’s been 18 months,” Davison told CNBC.

Clubhouse, which was initially only available on iPhone, allows users to find and listen to conversations between people. Users join “rooms,” where friends and strangers discuss everything from cryptocurrency and politics to diets and video games. Hosts can “pass the microphone” to others in the room and listeners can raise their hands when they want to speak.

The mainstream app with no income was quickly adopted by the guys in Silicon Valley. Its main funder is renowned venture capital firm Andreessen Horowitz, whose co-founder speaks from time to time on the platform.

It was founded amid the coronavirus pandemic as people looked for new ways to deal with it, but there is less hype around the app now than there was in the past.

“It looks like it’s fading,” venture capitalist Hussein Kanji told CNBC in reference to Clubhouse.

Its monthly active users in the UK, for example, fell from 550,000 in February to 160,000 in September, according to data from app analytics firm App Annie.

Respond to the request

Although initially reserved for invitations (invite codes were selling on eBay for $ 400 at one point), the company struggled to keep up with early demand.

Clubhouse said its weekly user base reached over 10 million people within a year of launch, and the app has been downloaded over 34 million times, according to app analytics company Sensortower.

“It just started growing really quickly, a lot faster than we ever anticipated or anticipated, or frankly hoped,” Davison said.

“I think in December [2020] alone, we have increased 10 times, ”he added. “It just continued. When all of this was going on, our team consisted of eight people and it was really stressing the system. “

The former Google intern said he had been forced to focus all of his attention on scaling up the technical infrastructure and increasing the size of his team rather than launching new features and ” refine the application.

“We’ve gone from eight people then to around 85 people today,” he said, adding that the workforce would likely drop to between 100 and 200 next year.

Elon and Mark introduce themselves

Clubhouse’s popularity increased earlier this year when several big names entered discussions on the platform.

In February, Tesla CEO Elon Musk and Meta CEO Mark Zuckerberg both appeared on Clubhouse within days of each other. Musk even asked Russian President Vladimir Putin if he would like to join him for a conversation on the platform.

The influx of big names saw Clubhouse downloads peak in February, according to App Annie.

But the hype started to weaken around April, which is ironically when the company announced a Series C funding round. The round would have valued it at $ 4 billion, but it’s unclear what the start is worth. -up today.

Asked about the drop in downloads, Davison said that “start-ups are generally not a perfectly linear path.”

In an effort to expand Clubhouse to more people, Davison launched the app on Android in May. He said 10 million new people joined within six weeks immediately after Android’s launch.

In July, as part of an effort to reach even more people, Clubhouse ditched the invite-only rule and opened the app to everyone.

“We have had a few months this year where the traffic has really increased,” Davison said, adding that it happened in February, June and July. “The goal is to get away from peaks and valleys and head for a stable path.”

As downloads declined, Davison said the number of “rooms” created each day on the app fell from 300,000 at the start of this summer to around 700,000 in the fall.

Theaters are currently capped at 8,000 listeners for technical reasons, compared to 5,000 a few months ago. Davison said he hoped to expand the number to 10,000, 15,000 and beyond in the coming months. To get around the cap, users set up “overflow” rooms and stream sessions to YouTube.

Strong competition

Several social media heavyweights have launched similar audio-only products after witnessing the app’s early success. Twitter now has Spaces, Facebook has Hotline, and Spotify has Greenroom. Amazon is also working on a Clubhouse competitor, according to The Verge.

“I’m not at all surprised that other platforms are launching audio the same way they launched photos, then video and other features,” Davison said, saying the launch of these rival platforms had no material impact on Clubhouse.

He added, “We believe that the company that paves the way for social audio will be all about social audio.”

In an effort to stand out from the competition, Clubhouse launched two new features on Monday. The first, Replay, allows creators to save their “rooms” and share them on their profiles and elsewhere. The second tells creators how many people have joined their room in total as opposed to the number of people in attendance at any given time.

Other, perhaps more notable, features were rolled out this year. In April, Clubhouse made it possible for users to send money to others on the platform through a partnership with Stripe.

Davison cited musicians as one of the beneficiaries of this, with some guitarists earning around $ 200 in 20 minutes. He declined to comment on the total number of users who have emailed so far.

Clubhouse itself has yet to make any serious money and currently operates only with an undisclosed amount of investor funds. However, it plans to start charging users for access to certain things in the near future.

“Some of the things that excite us are memberships for creators, paid events for creators, real in-room tips for creators, brand partnerships for creators,” Davison said. “When I say in the future, I mean probably in the next few months.”


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