Clubhouse’s Quick Ascent
In the spring of 2020, as the world grappled with pandemic lockdowns, a new social media platform called Clubhouse emerged. It promised an innovative approach to digital connection through audio-only conversations. Clubhouse's launch timing couldn't have been better. Founded by Paul Davison and Rohan Seth in March 2020, the app debuted when people were desperately seeking new ways to connect.
The platform's unique selling proposition was simple yet compelling: live, audio-only “rooms” where users could host or join conversations on any topic, replicating the spontaneity of real-world interactions. Users could join rooms for live discussions on various topics and either listen in or add their own thoughts to the conversation by asking to hop on the “stage.” Early adopters included tech luminaries and celebrities like Elon Musk, Mark Zuckerberg, and Oprah Winfrey, whose presence on the platform generated significant buzz.
By the spring of 2021, Clubhouse had secured around $100 million from investors such as Andreessen Horowitz and Tiger Global, bringing the total valuation to around $4 billion. In less than a year, Clubhouse was considered one of the hottest startups in the world and had over 17 million downloads.
Clubhouse’s success came down to a few key factors:
The pandemic created favorable market conditions. Almost all social apps and internet companies saw a boom in business during the pandemic. As people were locked inside their homes, they sought social interaction in new ways.
Invite-only, celebrity hype. Clubhouse began as an invitation-only app popular among Silicon Valley tech workers. Conversations held on Clubhouse would leak onto other platforms such as X (Twitter), causing outsiders to experience FOMO. It was about who you knew and securing an invite was viewed as aspirational. Joining the app was so desirable that invites were being sold for as much as $125 on eBay.
An innovative approach to social interaction. Live audio-only communication with the ability to have thousands of people tune in had never been done. It was like a cross between a podcast and a phone call and added a more human approach to communication than messaging. The format also lent itself to easily and casually talking with people you looked up to. Clubhouse was the only place you could go to hear Elon Musk answer questions from a random guy on the internet.
Growing Pains
During the peak of Clubhouse, Shaan Puri, a popular voice in the tech community, Tweeted why Clubhouse would fail. His analysis resonated with many and made others upset. Clubhouse investors blocked him. However, in the end, his analysis was bang-on.
By mid-2021, Clubhouse's growth had significantly slowed. Monthly downloads dropped from 9.6 million in February 2021 to just 900,000 in April 2021. Clubhouse was having issues retaining users and problems started to become apparent.
Content Quality
As the platform opened up to more users, the quality of conversations became diluted. Many rooms devolved into promotional pitches or low-value discussions, diminishing the platform's initial appeal. The Clubhouse experience was more like a museum than it was an internet company. The removal of being an invite-only app and the increase in the number of users on the platform made for a worse experience, which is the opposite of how network effects work.
Content Discovery
Clubhouse struggled to effectively match users with relevant content. As the platform grew, it became cluttered with rooms that weren't interesting. The lack of sophisticated content recommendation algorithms meant users often had to wade through irrelevant conversations to find engaging content.
Unlike other social platforms where users could quickly scroll through content and find something to keep their attention, Clubhouse required a significant time investment. Users needed to actively listen and participate, oftentimes joining mid-conversation and having no context as to what was being discussed. It was like attending a networking event and joining a table mid-conversation. It was just an awkward experience.
Technical Limitations
When users did find a room worth listening to (usually a scheduled show or panel), there were often technical issues. The app's infrastructure struggled to scale effectively, leading to frequent crashes and audio quality issues. These technical problems frustrated both hosts and listeners. Imagine inviting Mark Zuckerberg to join your room only for the app to crash multiple times as he was trying to talk.
Notification Fatigue
One of the main ways to learn about active rooms and interesting conversations was through notifications. However, you also found out about live rooms and people you didn’t know or care about. The app's aggressive notifications, while initially effective at driving engagement, became overwhelming for many users. Constant alerts about new rooms and active speakers led many to either mute notifications or uninstall the app entirely.
The Competition
There were many apps that launched competitive features to Clubhouse. X introduced Spaces and Facebook developed Live Audio Rooms. Facebook later killed off its Audio Rooms, but X found some success because of existing social graphs.
However, the biggest competition to Clubhouse was users’ time constraints. As mentioned earlier, tuning into a conversation on Clubhouse took a lot of time. Most people didn’t have an hour or two to sit and listen to a room in the middle of the day, especially as people started to go outside and go back to the office as the pandemic restrictions were lifted. If listening to long-form content, users preferred something that was a little more polished and coming from someone with subject matter expertise. Most find that in podcasts or audiobooks.
When people do get on their phones and open social apps, they do so in short spurts and opt for quicker entertainment from TikTok and Meta’s Reels, which was becoming popular at the time.
The New Clubhouse
In April 2023, Clubhouse announced that it was laying off 50% of its staff to “reset the company.” In the note to the team, the Clubhouse founders said it had become difficult for people to find their friends on the app.
Over the next several months, Clubhouse pivoted to become more focused on helping friends connect with friends to try and improve retention and engagement. They did this in several ways:
Shifting Focus to Social and Casual Interactions
Clubhouse shifted its focus from large, celebrity-driven rooms to smaller, more intimate communities. Clubhouse now emphasizes more personal, smaller-scale, casual communication, rather than large-scale, live events (though live rooms still exist).
The design aimed to recreate the intimacy of friends chatting, reducing the pressure to speak or host in front of large audiences.
On-Demand Formats
Clubhouse introduced asynchronous voice-only group chats, allowing users to participate in conversations at their convenience instead of in real-time. It added direct messaging capabilities to facilitate connection-building.
Clubhouse created "Houses,” which are persistent groups where people can send voice chats and plan rooms together.
Clubhouse today looks very different from what it did a few short years ago. The once viral live audio app is now just another (audio) messaging app competing with dozens of other messaging apps.
While Clubhouse revolutionized social media by popularizing audio-only interaction, its inability to address core user experience challenges ultimately led to its decline. Its story shows the importance of building sustainable engagement mechanisms and solving fundamental content discovery problems before scaling.
Key Learnings
Clubhouse's rise and fall offers several key lessons for social platforms:
Timing and exclusivity can create initial buzz, but sustainable growth requires delivering consistent value over and over again—which preferably increases when more users onboard, not the opposite.
Social apps are won or lost with content discovery. The first few seconds after opening a social app are the most important. If something entertaining or interesting doesn’t present itself from a creator or friend, users will quickly move on to the next app.
User experience must evolve with scale—what works for 10,000 users may fail for 10 million.
Notifications are a great growth hack, but if you are consistently dependent on them to get users to engage, you have already lost.