The story of the Clubhouse founders

If you have read the news recently, then you've heard of Clubhouse. The social media app has taken the world by storm. But, chances are, you can't use it just yet.

It's only audio, it's filled with controversy, and it has no memory. You can only get invited, for now, and there's little moderation. Plus, celebrities like Elon Musk and Oprah love it. So, of course, Clubhouse has all the ingredients for controversy. 

And it's making the news big time. From government bans to its recipe for success, we'll tell you all about Clubhouse in this episode of Forensics. 

Origins

Clubhouse's success seems to come out of nowhere. We know that it was released in April 2020, and its founders are Paul Davison and former google employee Rohan Seth. 

As 2020 began, Clubhouse was just an idea: no users, no functionality. And, it's not as if the number of users increased dramatically. Five months later, it had less than 5000 beta users. But, it had secured $12 million in funding and a $100 million valuation, all thanks to its meteoric rise to fame. 

You see, its idea was, and is, very simple. But also enticing. In an era in which social media has grown to have restraints, conditions, and moderation, Clubhouse seemed to have none of it. 

Users could access virtual rooms to listen to others having free-flowing conversations: no scripts, no censors, just dialogue. The rooms had a host or a moderator who was free to control the conversation flow or do nothing at all. Users participated by raising their hand, or the host could invite them to talk. Plus, the app kept no records, and remember this for later.

The equation is alluring. But, there's more. Most, if not all, social networks demand that you look at a screen. Clubhouse doesn't. You can listen to a conversation while you do other things, like chores or commuting: an ideal feature for those with hectic schedules, such as those in the tech world. 

Let's remember that many in the tech world might be friends with celebrities. So, in no time, names like Kevin Hart, Drake, Oprah, and Jared Leto were now part of the mix. And, what do you get when you have celebrities, exclusivity, and exciting topics? Well, the rest of the world has FOMO. 

Clubhouse booms in popularity

FOMO was just what the app needed. Let's look at the numbers: with only 1500 official users, the app already had a $100 million valuation by May 2020. 

People wanted in, but Clubhouse controlled invitations and create scarcity, which led to the hype and a sense of mysticism and elitism. At first, CNBC reported that only about a dozen or so members joined per day. While this number has increased lately, the app is still invite-only. 

Word of mouth only increased its appeal. Users told of their experience using the app. Some heard MC Hammer address racial issues and others listened to Jared Leto talk about fruits and soap. 

In fact, these first-hand accounts were, for a while, the only evidence of how the app worked. And, yes, the world was intrigued. Virtual rooms catered to your and your contacts' interest, which led to networking. Plus, private rooms allowed for top-secret conversations. With immediate interactions and no schedule, Clubhouse inched closer to a real-life conversation, at a moment in which we didn't have them. 

The app was undoubtedly the stuff of legend. But it got its big boost when Elon Musk hosted a session with Robinhood CEO to talk about the latest happenings in the stock market in January 2021. 

The combination was ideal: two big names in the industry, talking about controversial, up-to-date topics and no script or censorship. The channel maxed out and, overnight, Clubhouse's success leaped forward. Plus, if you weren't there, you'd miss it. 

Well, not quite. Apparently, one user transmitted the audio on his YouTube channel. So, there was a loophole that Clubhouse needs to tackle. But, within the app, no trace remains of that conversation.

By February 1, 2021, Clubhouse already had two million users and a $1 billion valuation, with users growing exponentially, not even a year after its release. It seemed that the app was perfect. And, what happens when everything is perfect? Just enough controversy to shake things up. 

The 3 C's: Controversy, Censorship, and China

While some say that Clubhouse has no moderation, it isn't exactly true. Rooms can have a moderator, or the host can choose to block users or kick them out of the conversation.

And, being a moderator is now a thing. It's becoming a role worthy of recognition within the app, even if testimonies say that you are basically a puppet of those who choose to start a conversation. 

On the other hand, some moderators can choose not to do anything. And, conversations can get heated quite quickly. Kevin Hart felt the wrath of many criticizing some of his jokes, and Chet Hanks, who famously is Tom Hanks' son, I guess, was knee-deep in trouble for his comments on accents. 

Also, controversies arose when some rooms were actively blocking journalists from rooms where any topic could go. So, it's clear that, from now on, free speech, moderation, and discrimination will be in a tug of war in Clubhouse's rooms. 

In this topic, the founders have been lenient (li - nient). Clubhouse explained that it didn't allow users to report on harassment and other abusive behavior in its first terms of service as it interfered with the initial idea. Faced with harassment, journalist Taylor Lorenz wrote on how she was powerless to stop users trolling her. 

She met with Davison in July 2020 and suggested some changes like banning users and defining a set of expected behaviors. Still, according to The Verge, there's no evidence that Clubhouse implemented these changes to this day.

This topic gained traction on Twitter and set forth another debate. Having designed the app for no moderation, how will the founders moderate if they have to? 

And, it wasn't just Taylor Lorenz. Vanity Fair wrote that Clubhouse had all the traits to become a "haven for the powerful to flirt with misogyny and racism," as well as antisemitism and general discrimination. In that same article, Vanity fair reported that Clubhouse has actively said that the company is against these and other forms of abuse. 

The company unequivocally condemns all forms of racism, hate speech, and abuse, as noted in our Community Guidelines and Terms of Service, and has trust and safety procedures in place to investigate and address any violation of these rules.

However, these promises haven't translated to actions. Though Clubhouse offers tools and training, such as the Moderator's club, experts consider that the lackluster effort might go against the tech world's vision for inclusion and tolerance. 

Thanks to this lack of moderation, short-lived conversation, and restricted access, Clubhouse became a massive hit in China. In fact, e-commerce sites within China were selling invite codes for $23 to $61 per code. 

Clubhouse became a platform for Chinese tech investors, professionals, and academics to discuss Uighur (We gor) populations' incarceration and debates about democracy. It was a hit. But, China would send a powerful message. In early February 2021, it blocked Clubhouse, and it became another victim of the Great Firewall of China. While it was short-lived in China, it seems to be in its beginning stages in the rest of the world. But not without debate. 

What's the Future for Clubhouse?

We've seen how social media has had to adjust to a changing society. As we fight to advance in racial and gender equality, inclusion and equality, Clubhouse must consider a sustainable future. 

And, already, the app is struggling to handle both its popularity and moderation. The company has about 10 employees, not enough to handle peaks in use, such as when Mark Zuckerberg appeared in a room. So, it's clear that Clubhouse needs to take all these variables into consideration. As we have seen in the past with Twitter and Facebook, when social media doesn't act upon community guidelines quickly, they can bite back. 

Once it handles these issues, many consider that Clubhouse's success is highly likely. In fact, there's another debate: could it replace the podcast? Some say it will. While others believe it will merely coexist with podcasts instead of replacing them, as the immediacy of Clubhouse hinders its sustainability in the future. With podcasts, you can listen whenever you want, as opposed to Clubhouse. 

Then, there are the conversations themselves. Users have said that some rooms, even those with celebrities, are quite dull sometimes. In a future with no lockdown or quarantine, listening to celebrities and regular people alike might lose its charm. We'll go to a bar and chat, granted with no celebrities involved. 

So, tallying up the pros and cons of Clubhouse's future, it has many things to its advantage. It's probably as close as we can get to an unscripted interaction with a celebrity or expert. There's no record of the conversation, and everything happens instantly. In these strange times of isolation, it's as close as we can get to a real-life conversation.

But, on the other side, moderation and digital abuse will play a part in Clubhouse's future. How will it manage these topics? It's up to the founders, but one thing is for sure: they have to do something. 

Perhaps, charging for a subscription? This might drive away some of the users, which in turn, maintains some levels of exclusivity. But what about growth? Is this one of those situations in which they have to ditch the original, successful model for a large-scale idea? 

And, it's not like the rest of the world won't ride on Clubhouse's success. Just as the app is skyrocketing in popularity, rumors have surfaced that Facebook started working on an audio-chat product to compete with Clubhouse. So, the race to capture conversations between ordinary people and celebrities is on. 

The chance of talking to celebrities and experts is attractive. But, it's not always possible. You might not have a Clubhouse invitation, but what about participating in SlideBean's Founder's Edition? 

In our Founder's Edition plan, we include the chance to talk with experts in the startup world and ask about anything from fundraising to pitch decks. For more information, go to slidebean.com/founders-edition.com.

For now, we can say that Clubhouse is very popular, and it's growing as we speak. It's exciting to see where it's headed. How do you think this remarkable idea will evolve? Let me know in the comments below. 

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