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Technology

Doing business behind Clubhouse's velvet rope

Clubhouse offers proximity to influencers and ideas that businesses should pay attention to, but the competition for listeners is heating up. We reached out to venture capitalists and entrepreneurs to understand how the platform really works.

Clubhouse has been shaking up the social media world since it appeared on the scene a year ago, and it shows no signs of stopping. Launched at the height of the pandemic in April 2020, the invite-only live audio app attracted $12 million in funding from Silicon Valley venture capital firm Andreessen Horowitz within its first month, propelling its value to $100 million. And that was just the warm-up act. 

Since then, Clubhouse has skyrocketed to 12.7 million global downloads and about 10 million weekly active users. One year post-launch, Bloomberg reported that the fledgling platform is in talks to raise funding in a new round with a $4 billion valuation: four times the valuation Clubhouse hit this January. 

READ ALSO: Clubhouse launches Android app. A little too late?

With this much money on the table, it’s no surprise that several big-name competitors have announced plans to “crash the party.” 

Last week, Twitter launched Spaces, its social-audio platform competitor to Clubhouse, available to anyone with more than 600 followers. Spotify bought the sports-focused Locker Room app from Betty Labs (dubbed as the “latest Clubhouse clone”) last month in hopes of accelerating its entry into live audio. Microsoft’s LinkedIn has confirmed plans to develop a social audio experience in its app. Discord’s new Stage Channels feature lets users promote live audio events to their audiences with up to 1,000 participants. And Facebook’s Live Audio Rooms feature is expected to launch later this summer.  

READ ALSO: Analysis: from Clubhouse to Twitter Spaces, live audio moderation challenges social media

Up until a few days ago, Clubhouse was only available for iOS, which limited its reach in Android-heavy regions of the world like Latin America and created an obvious service gap for competitors to fill. Clubhouse’s new Android version is now available in beta in the U.S. and will roll out in other English-speaking markets and the rest of the world in the coming weeks.

So what’s behind all the hype? Clubhouse features an addicting mix of pop-up chats, open-mic performances, panel discussions, and networking conversations, all happening in real time and hosted by other members. Many Clubhouse event hosts are quite famous in their fields. The Clubhouse platform currently doesn’t offer any in-app recording capability, which creates an extra level of stickiness to its content due to our natural fear of missing out (FOMO). 

READ ALSO: Discord launches Clubhouse-like voice chat feature for audio events

Much of Clubhouse’s appeal is its velvet-rope exclusivity and elite, unfiltered access to top names from the business and entertainment world which have included such high-profile influencers as Elon Musk, Brazilian TV director José Bonifácio Brasil de Oliveira, and Facebook CEO/founder Mark Zuckerberg

If you’re a business executive or entrepreneur, you may be wondering what the point of Clubhouse is beyond the guilty pleasure of binge-listening to your favorite celebrities. It’s all about access and proximity to business peers, partners and investors you wouldn’t otherwise have access to, said Flavio Pripas, managing partner at Redpoint eventures, a partner to the Silicon Valley VC fund based in São Paulo, Brazil. 

Flavio Pripas, managing partner at Redpoint eventures. Photo: Courtesy

In 2015, Pripas helped design and lead São Paulo’s CUBO, the world’s second-largest entrepreneurial hub, and served as its CEO prior to joining Redpoint eventures. He now hosts several conversations per week on Clubhouse about entrepreneurship and innovation that typically have 70 to 100 people in attendance, but can attract as many as 500 attendees. 

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“[At CUBO] we started with more than 250 people, and grew to more than 3,000 people coming in every day for meetings, workshops and classes. I was the host [of CUBO] and my daily role was to talk to people every day. Then I moved to Redpoint, and I kept talking with people because we are investors. We need to talk with startups, our LPs, investors, partners and founders. But when the pandemic came, we lost those organic connections, like meetings and conversations we used to have [over coffee] or in the corridors of the office. Clubhouse was the first platform that brought that serendipity back a bit.” 

He says that, before Clubhouse, he’d spent one year just talking with people who were scheduled in his calendar. “After Clubhouse, I started connecting with different people almost every day. So that’s why I started using it, and I’m still using it. Just today [on Clubhouse] we had the previous Latin American president of SAP talk with me and the senior vice president of sales at Dell for Latin America about how they got to their leadership positions in a very open conversation. I have analyzed some startups I was first introduced to through Clubhouse, and I’ve talked with potential partners that I was introduced through Clubhouse. Today, it’s still the only platform where I’m having these kinds of conversations because of the pandemic,” Pripas said.

READ ALSO: Are you listening? It’s Clubhouse, the new audio-based social network

A practical example of how doing business on Clubhouse can be like

One of the entrepreneurs Pripas had the serendipity to meet in Clubhouse was Pedro Calvo, who was in the process of launching Weex. The company creates digital HR training campaigns with gamified activities to engage users. Less than one year old, Weex has already landed some impressive clients, including CocaCola, Fiat, and Volvo.

Pedro Calvo, COO at Weex. Photo: Courtesy

Calvo’s curiosity as a marketing professional is what first brought him to Clubhouse, but the opportunity to meet and have meaningful conversations with other like-minded entrepreneurs and leaders like Pripas is what made him stay. 

READ ALSO: “We want to build one unique fintech infrastructure for all Latin America”: Pomelo’s CEO

“I met a lot of people from the venture capital world, a lot of entrepreneurs, and others searching for people to do some benchmarking and exchange ideas. And I noticed [Flavio Pripas] was very often in Clubhouse, and sometimes he was open to conversations with people. Then I found a moment of courage, and I started interacting with him. We started to exchange some emails. He instructed me to search for the CUBO network, which is a place that’s very good for doing business with big companies in Brazil. We stretched our relationship in lots of other ways after that,” Calvo said. 

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Meeting Pripas in Clubhouse eventually led to Calvo pitching his business for potential investment to Pripas and other partners at Redpoint eventures, and although the Brazilian early-stage VC fund declined to invest in Weex for now, Calvo gained important insights into how to make his startup more attractive to investors and further hone his pitch.

“Before Clubhouse, I didn’t spend any time thinking about networking with venture capitalists. But in Clubhouse, I asked a question of Manoel Lemos, another managing partner of Redpoint eventures, who said that I should start those relationships as soon as possible. So I started this movement to really understand how venture capital works. In a few months I was able to pitch to five of the top venture capital companies in Brazil. I still don’t have a plan for when I will start to search for venture capital, but I was able to meet a lot of people and collect feedback that I am applying to Weex to make us even more investable when we decide it’s the best moment to do it,” Calvo said. 

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The best way of using Clubhouse for business

Calvo and Pripas both say Clubhouse is best when used as an icebreaker: “We don’t establish a relationship inside the platform. We get introduced to people inside the platform. If we are interested after that, then we can leave the platform and maybe schedule a Zoom meeting or maybe exchange some emails and continue the conversation like that,” Pripas said. 

Another important point of etiquette: If you want people to listen to your ideas or pitch, don’t be an attention hog. “If you’re not the leader of the room and you have a chance to speak, keep it short. And then, if people are really impressed with what you are saying, they will ask you more questions,” Calvo said. 

We can expect Clubhouse to innovate further as competition for listeners heats up. The company announced its Creator First program in March with a host of tools and features designed to help hand-selected influencers generate top content and monthly stipends to support its ongoing development. Finalists began airing their pilot episodes on May 10, and you can bet that advertisers will be paying close attention as they consider how to make this content strategy work for their brands. Clubhouse recently rolled out a new payments feature that lets members tip creators directly for their contributions. 

READ ALSO: 2 out of 10 top artists on YouTube’s music chart ranking are Latinos

Will Clubhouse’s elite membership and content model remain attractive with so much competition on the horizon? It’s hard to say. After peaking in February with 9.6 million downloads, Clubhouse downloads fell sharply to 2.7 million in March and 900,000 downloads in April, according to Sensor Tower. 

Only time will tell whether this is due to shifts in user behavior as the world begins to reopen or waning interest in the Clubhouse craze itself.

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