The clubhouse buzz is fading, but Andreessen Horowitz is not far behind

The Clubhouse audio app was in vogue earlier this year, but there are indications that the buzz around it is starting to dissipate.

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

Musk even asked Russian President Vladimir Putin if he wanted to join him for a conversation on the platform. It is advancing rapidly to the present day, however, and it seems that some of the hype is gone.

The invitation-only iPhone app, which celebrated its first anniversary last month, allows users to find and listen to conversations between groups of people. It was quickly embraced by Silicon Valley types and was backed by well-known venture capital firm Andreessen Horowitz (whose co-founder talks to the app from time to time) in a January funding round that, according to reports , valued it at $ 1 billion.

On Sunday, Clubhouse confirmed that Andreessen has led a new round of C-Series funding after The Information broke the news on Friday. The latest round of investments, which includes new sponsors DST Global and Tiger Global Management, values ​​the company at $ 4 billion. But it seems investors are more bullish than many of the app’s users.

While some people were desperate to receive an invitation to the Clubhouse, some users who are already on the platform don’t see the long-term appeal. Clubhouse, which was founded in April 2020 by Paul Davison and Rohan Seth, did not immediately respond to a request for comment from CNBC.

“I think the initial FOMO about inviting a clubhouse and trying it out is gone,” social media analyst Matt Navarra told CNBC.

One of the main problems with Clubhouse is that there is a lack of relevant talks or rooms that users see when they open the app.

“I tried to get into it a bit, but the only rooms it showed me were run by the kind of people who ironically call themselves‘ growth hackers, ’” one user told CNBC, who said it looked like managers were coming. of social media before everyone else.

Navarra said Clubhouse’s challenge “is to make sure that when you open the app, you always discover a lot of fantastic rooms and speakers”.

He added: “The content quality issue will only get harder as more users are added and quality content is diluted. Just like when Meerkat users started watching endless live plays, the Clubhouse is full junk mail, scams and snake oil sellers. “

Timothy Armoo, CEO of Fanbytes, a company that helps brands advertise through social video, told CNBC that “showing the right people the right things at the right time” is a “hard problem” and who cannot climb.

“The elitists have left the building. Marc Andreessen is no longer doing things. The appeal of Clubhouse was that you could almost hear interesting convos of interesting people. How interesting people are, what sense does it make?”

Armoo ​​noted that the buzz around the Clubhouse is also dissipating because people can go out now as Covid restrictions relax in countries like the UK and the US.

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

Clubhouse downloads have stabilized, according to an App spokeswoman Annie. “As with most app releases, there’s always a huge download in the first few weeks that decreases,” he said.

In comparison, TikTok was downloaded 500 million times in the five months prior to April 2020, which meant the total downloads were 2 billion, according to application analytics firm Sensor Tower. Elsewhere, the augmented reality mobile game Pokemon Go was downloaded more than 500 million times in a few months after it was released, according to research firm Statista.

Some Clubhouse users who organize events in the app have started looking for alternative options.

Sara Essa, the creator of the sustainability center, which hosts several weekly events at Clubhouse for its 41,400 members, told CNBC she is considering a different platform.

“I try to get my community off the platform and organize our talks elsewhere,” said Essa, who claims that Sustainability Hub is Clubhouse’s largest climate community.

He said “people are leaving” quickly because Clubhouse changed the algorithm and accused the company of not listening to users ’comments.

Finding a new platform is “Essa’s biggest hurdle right now,” but she’s considering the $ 5.6 billion Hopin online event app, despite being less than two years old. He has less desire to use Twitter’s rival with Clubhouse, Twitter Spaces.

“Twitter Spaces wouldn’t work,” he said, adding that he’s 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, general editor of tech news site TechCrunch and host of “The Tech Media Weekly Wrap,” left Clubhouse in favor of Twitter Spaces last month. However, the raid did not last long.

“People: I think we need to get back to our old Club house,” Butcher told reporters he invited to the show via Twitter after organizing just two events at Twitter Spaces. “I’m totally ready to go back to Twitter Spaces at a later stage, when they’ve fixed the bugs and added Android, but there are several issues.”

Twitter Spaces not only crashed into Butcher’s speakers, but also crashed into him, causing the entire show to air out. “The room is over!” Butcher told speakers during a live event. “I had to restart the whole room! Lost audience!”

He also criticized Twitter Spaces for: having low audio quality; the inability to “pre-book” or schedule a space, making it difficult to promote; and a low audience number compared to the Clubhouse. I got about 40-50 at Twitter Spaces versus 150 plus at Clubhouse. Twitter did not immediately respond to a request for comment from CNBC.

“It’s clear that the‘ brilliant new thing ’effect disappeared after a while with Clubhouse,” Butcher told CNBC. “There are only so many random, poorly curated discussions that people can adopt. So I moved my regular show to Twitter Spaces to look for a ‘reach’ above the novelty, given the importance of Twitter. we have stopped the experiment due to technical problems, I think we will return. The Clubhouse will have to get out of its clandestine culture if it is to succeed. “

Earlier this month, Bloomberg reported that Twitter was also considering buying Clubhouse for about $ 4 billion. It came days after Bloomberg reported that Clubhouse was in talks to raise funds from investors in a round that would value the business at about $ 4 billion.

And there could be more competition along the way.

Reports suggest that Facebook is working on its own Clubhouse competitor. Screenshots released by TechCrunch in March suggest that Facebook’s audio product will be an extension of Facebook’s existing Messenger rooms rather than a standalone app.

Meanwhile, LinkedIn, Slack and Spotify are also working on rival products, according to reports.

Technical analyst Benedict Evans, a former partner at venture capital firm Andreessen Horowitz, told CNBC that the “audio chat” that ends is accustomed everywhere in the same way that “stories” are ‘have become ubiquitous on social media platforms.

“But the network you add to the issues and is not interchangeable, and the mechanics to link to them may matter more than the format, which is why TikTok works,” he said in an email.

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