Clubhouse Media wants to overcome the confusion of Clubhouse applications

It was a phrase uttered countless times during the era of Zoom meetings. But this time, he inadvertently sent an unknown stock to new heights: “Can you hear me?”

Elon Musk debuted at Clubhouse, the only audio app he’s popularized in recent months, in part because of Musk’s involvement in that room on the last day of January. In a matter of seconds, the room reached a capacity of 5,000 people. Overflowing rooms crowded to hear the CEO of Tesla and SpaceX. In the words of the room’s host, Sriram Krishnan, “You almost broke into the clubhouse.”

Little did anyone know, Musk’s involvement would also arouse great interest in a completely unrelated company: influential marketing and public trading marketing firm Clubhouse Media Group, which is not affiliated with private audio app Andreessen Horowitz, which about a year ago. old.

At the end of the interview, Musk said the experience was “amazing” and said he hadn’t even known about the app a week before. It aroused interest in the Clubhouse. Google searches for “Clubhouse shares” peaked on Feb. 1, the day after Musk spoke. But instead of buying shares of the app, retailers found the marketing and media firm for influencers running several influential mansions. This did not stop many of them, who bought it out of confusion or wanted to interpret it.

The shares of Clubhouse Media, better known for creating content creator houses, had already increased at this point, increasing in the general interest of applications. At the close of Monday, stocks have risen 472% to date, trading at $ 13.90 per piece, placing its market capitalization at $ 1.3 billion. At most, the shares traded at $ 28.43 per share on Feb. 16. Compare that to its $ 2.50 price on Nov. 12, when the company completed its reverse merger to go public.

From health to influencer management

Clubhouse Media (formerly called West of Hudson) was launched last March by CEO Amir Ben-Yohanan, the company’s lawyer and president Chris Young, and Daisy Keech, a social media influencer with millions of followers who ended up of leaving another high-profile house. The company wanted to launch its own home, where Keech would bring some friends. (Keech has since moved to focus on his own brands.)

Creator mansions usually house a handful of influencers at any one time, serving as an agency and elaborate ensemble, so they can get monetizable and continuous content with an opulent fund. Instead of paying rents or fees for things like the cleaning service, developers usually provide promotional content for advertisers or for the home.

Grouping a handful of influencers also helps them promote and expand their cross-cutting reach. The company said in a January presentation that one of its influencers increased its Instagram followers to 5.2 million, from 3.22 million in just four months, while its TikTok followers went from 3 , 4 million to 6.2 million.

Young said Clubhouse Media works with creators on traditional brand deals, charging a 20% fee. They also create intellectual property that could get licenses and earn revenue. So, for example, creators would create YouTube videos. In one case, Young said one of his homes earns enough revenue with Google AdSense to pay the rent.

The company also has a kind of risk incubator.

“The idea was to acquire or found companies or hold stakes in companies that we could use our marketing arm, which was our reach of influencers to drive top traffic there,” he said. So far, the company has only committed to a handful of companies, including about $ 400,000 to host member Lindsay Brewer’s racing career.

The company also finds out how to offer shares to its creators. Currently, one creator owns shares in Clubhouse Media, while others are incorporated, Young said.

The company’s trip to the market was a bit unusual, mostly because it was the first content house to do so. Instead of completing an IPO or SPAC, it was made public through a reverse merger. The already public Tongji Healthcare Group acquired the company in November and the influencer management company was brought under control.

At the same time, the company applied to change its name to Clubhouse Media Group. He also changed his marker symbol to “CMGR” from “TONJ”. This change did not take place until January 20, when confusion about which company was on track.

“When we did the [reverse takeover] transaction, when we bought this shell, the idea was to always call it the original name of our house, which was Clubhouse, ”Young said, referring to the company’s first creative house in Beverly Hills.

“It’s a little frustrating”

The timing was especially poor, as the Clubhouse’s social media app was open to a wider audience, expanding from its union group of Silicon Valley investors and celebrities such as Oprah Winfrey and Jared Leto. As of March 14, it was downloaded 12.7 million times, according to mobile data analytics firm App Annie.

“It’s a little frustrating,” Young told CNBC in a video call earlier this month. “This year is a weird situation because we were so used to being Clubhouse last year and no one knew about the Clubhouse app. This year has become everyone talking about the Clubhouse app and there’s confusion.”

“Obviously we have tried our best to avoid confusion. We have issued public statements, we want to make sure shareholders are not confused: we have no affiliation with them. We are a different company,” he added.

Young said Clubhouse Media still has enough media value and presence to continue its Clubhouse name despite the confusion. There is also the question of whether the application can survive after the pandemic.

“I think we were the first audiences on the internet everywhere with a lot of press and frankly I don’t know where the Clubhouse app is going to go,” he said. “There will be a lot of competition in the space, there will be another 30 competitors in the audio space, it can survive, maybe not.”

Spokesmen for the app and Andreessen Horowitz did not respond to requests for comment on the mix.

What will follow for Clubhouse Media

Designer homes are not a new concept, as reported by the New York Times last January, although it seems as if a new generation is rapidly emerging along with the rise of TikTok.

Still, Clubhouse Media will have to work to convince investors that influencer support is a viable business.

For fiscal years ended December 31, 2020 and 2019, the Company reported net losses of $ 2,565,409 and $ 74,764, respectively, and negative cash flows from operating activities of $ 1,955,239 and $ 30,488, respectively.

“There is substantial doubt about Clubhouse Media’s ability to continue as a continuing concern as a result of historical recurring losses and negative cash flows from operations, as well as its reliance on private capital and funding.” , the company said in a statement released on March 15. -K file. The company expects to continue reporting negative losses and cash flows in the foreseeable future, he added.

Young said earlier this month that the company will dedicate this coming year to focusing on building a more robust and diverse revenue model. This could range from acquiring companies in the social media space to software companies, such as digital agencies that manage brand offerings or software platforms that would allow influencers to create additional revenue.

Most recently, Clubhouse Media acquired “The Tinder Blog,” a popular meme page with 4.2 million Instagram followers, for an undisclosed amount. In a press release announcing the deal, the company said aggregator accounts like the blog “do highly sustainable and scalable business that complements our mission and portfolio.”

Clubhouse Media may also begin to expand its reach of content houses, saying in a presentation this month that it intends to add two to four each year. Young said the company is currently looking at Miami; Austin, Texas; Scottsdale, Arizona; and Nashville, Tennessee, though there is nothing of stone. He could also venture internationally to Dubai and Bali. The company currently operates five homes entirely in California, Las Vegas and Europe, ranging from residents.

Ultimately, Young said he wanted to overcome the confusion and establish Clubhouse Media as his own successful company.

“It’s important to know that we are a business in operation, that we have been running for a year and that we have great aspirations and I think a platform to be really one of the few companies listed on the stock exchange that invests in a diverse portfolio in the space of social media, ”he said.

Subscribe to CNBC on YouTube.