What Happened to Clubhouse? How a $4 Billion Audio App Lost Its Audience
Clubhouse was the app everyone chased an invite for in 2021, reportedly talked to Twitter about a sale at around $4 billion, then cut more than half its staff. Here's the full arc, including what it looked like in Nigeria.
When was the last time you opened Clubhouse? Better yet, when was the last time you thought about the once popular “place to be” during and post-pandemic? It feels like a lifetime ago when it was all the rage, and if you asked any group of folks, they’d pelt you with jokes just like this user did:
Now, the app does still exist. These days it understandably has a much smaller team, works differently from the version people remember, and we couldn't find any user numbers the company has published since its relaunch.
How it got from there to here is worth a conversation or two. It's one of the clearest examples of an app that fit a moment in time, but not necessarily what came after…
What Clubhouse Was & How Fast It Grew
Clubhouse is a voice-only social app founded by Paul Davison and Rohan Seth. It launched in spring 2020, at the start of the pandemic lockdowns, as an invite-only app for iPhones. Users joined live audio "rooms" where a few people spoke and the rest listened, a bit like a talk-radio show that anyone could host.
Two things drove the early buzz. Invites were scarce enough that they were reportedly sold on eBay. And the rooms drew big names, with Fortune noting that even big shots like Oprah and Elon Musk used the platform and, of course, pulled in large crowds.
Growth came in a rush in early 2021. By April, the company itself said it had around ten million active users a week. Money followed. Clubhouse raised a $12 million Series A in May 2020 and closed a Series C in April 2021, led by Andreessen Horowitz, at a $4 billion valuation. The Hollywood Reporter put its total funding, at the time, at around $300 million.
But not everyone was a fan. Unsurprisingly (and truly this should shock no one), China geoblocked the app in February 2021, which cut off one of the markets that had generated much of its early buzz. Perhaps to counterbalance that loss of market, Clubhouse reached Android in May 2021 and opened to everyone around July of that year.
The Reported Twitter-Buyout Talks
In April 2021, Bloomberg reported that Twitter had held talks to buy Clubhouse for about $4 billion. TechCrunch's source confirmed the discussions took place, and both reports eventually reported that the talks were over. Clubhouse then went after new funding at about the same valuation instead.
Not one to be stalled, Twitter was already building its own version. Infamous for some, a joy for others, Spaces, a drop-in audio feature, was being tested at the time and had reached Android users long before Clubhouse did. In fact, at this time, Clubhouse had also only just launched its first monetisation feature, which let users send each other payments.
That sets up the founder-focused question that spurred this trip down memory lane. A company can be valued at $4 billion in a moment of hype, but why would people still need the product once the novelty fades and the platforms they already use offer the same feature?
Clubhouse in Nigeria
Nigeria was one of the app's loudest markets. A BellaNaija writer reported in early 2021 that the number of Nigerians on the app had more than quadrupled since early November. The craze for invites was driven largely by people tweeting screenshots of rooms, and many of those rooms ran on relationships, money talk, and scandal.
By mid-2021, the company was courting the market directly. Daily Trust reported that Clubhouse's co-founders held a town hall with Nigerian journalists on the app, said they were focused on Nigerian content creators, and planned direct payments between users. The company claimed eight million new users in a single month after its Android launch, more than 500,000 rooms created daily, and an average of over 60 minutes a day per user. Those are the company's figures, not independent ones. Ripples Nigeria reported that Clubhouse also added Hausa, Igbo and Yoruba to the app as Twitter Spaces cut into its growth.
Not everyone was impressed, though. Legit.ng covered a Nigerian user who said he was removed from a room about wealth creation after asking the hosts whether any of them were millionaires. More reviews complained about how a large number of the rooms had become centered around money-hustle talk. On the one hand, it makes sense why, considering the economically-cripping nature of the COVID-19 pandemic and its associated quarantine. On the other, that money-hungry period had quite a number of sordid tales accompanying it, and maybe the monotony of the subject matter in Clubhouse’s rooms was a sign of bad things to come.
The Fall of The House of Clubhouse (Why did Clubhouse Fall)
There wasn't just one cause. Research and reporting has a whole family of reasons for this decline:
The lockdown ended. Davison and Seth said as much in their own 2023 open letter: as the world reopened, it got harder to find friends on Clubhouse and to fit long conversations into the day.
Rivals had distribution. Twitter Spaces lived inside a network people already used. LinkedIn, Facebook and Spotify all tried their own audio products. In Nigeria, Ripples reported that Spaces limited Clubhouse's growth.
Exclusivity ran out. Invite-only created the scramble. Once anyone could join, the scarcity and its thrill were gone.
Moderation was weak in early times. Early users brought hate speech, including antisemitic content, and the app was criticised for a lack of moderation, according to coverage of the 2023 layoffs.
How far usage fell is harder to pin down. One independent reconstruction put weekly users near 3.5 million by September 2021, down from about 10 million in March. Clubhouse didn't publish figures to confirm that, so we’d be wise to treat it as an estimate.
The Reset in 2023
