Audio app Clubhouse still has ‘years of cash’ as it shifts strategies

Clubhouse, the audio-only social app that surged in popularity early in the pandemic, is focusing more on smaller, private groups, its chief executive officer Paul Davison said Thursday.
While Clubhouse initially grabbed headlines in 2020 with rapid-fire venture fundraising and appearances from celebrities such as Elon Musk and Oprah Winfrey, the startup failed to maintain its rapid growth. Clubhouse laid off employees this summer and has experimented with shifting its strategy. Now, the once-hot app for public speaking is focused on cultivating online communities that are more intimate, Davison said at the TechCrunch Disrupt conference in San Francisco on Thursday.
To allow for smaller conversations, Clubhouse has been testing a new feature called Houses, which Bloomberg first reported on in June and which Davison confirmed in August. In Houses, users can create private clubs, in which invite-only members can more freely talk to each other. Davison said that users from all over the world tell him about the connections they’ve built or deepened in Clubhouses’s closer-knit communities.
“More and more of those rooms are happening in private every day,” he said. “When we look at the product, that’s what drives the magical experience.”
Davison, who has created a string of social apps during his career, said he’s fixated on building tech that mimics real-life social interactions. “The real world operates through friends of friends,” he said. Twitter created a rival product called Spaces, where users can host live audio conversations, but Davison said that it’s not focused on the same thing. “Twitter is a broadcast product,” he said. “Clubhouse at its core is about participation in conversations and friendships.”
To keep growing the company, Clubhouse can’t simply become one sprawling community — it needs to become a network of smaller clusters, he said. He compared it to the way a cell cleaves via mitosis once it reaches a certain size. “We split off so we can retain that intimacy,” he said. Clubhouse now has around 100 employees and “years of cash in the bank,” he added.