Clubhouse Media wants to get past the confusion of the Clubhouse app

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

Elon Musk made his debut on Clubhouse, the audio-only app that has skyrocketed in popularity in recent months, partly due to Musk’s entry into that room on the last day of January. Within seconds the hall reached its capacity of 5,000 people. Overflow rooms filled up to listen to the CEO of Tesla and SpaceX. In the words of the host of the room, Sriram Krishnan, “You nearly destroyed the clubhouse.”

No one knew that Musk’s participation would also spark a huge interest in a totally unrelated company: the publicly traded influencer media and marketing company Clubhouse Media Group, which is not affiliated with the private Andreessen Horowitz-backed audio app that runs for about a year. . old.

At the end of the interview, Musk called the experience “great” and said he wasn’t even aware of the app a week earlier. It ignited interest in the clubhouse. Google searches for “Clubhouse stock” peaked on Feb. 1, the day after Musk spoke. But instead of buying shares of the app, retailers turned to the influencer marketing and media company that runs several influencer mansions. That didn’t stop many of them, who either bought it because of confusion or who wanted to play the confusion.

Stocks of Clubhouse Media, which is best known for running content creation homes, were already on the rise at this point, rising due to general app interest. The stock has increased since the close of Monday 472% since the start of the year, trading at $ 13.90 each, bringing the market cap to $ 1.3 billion. At its highest point on February 16, the stock traded at $ 28.43 per share. Compare it to the price of $ 2.50 on Nov. 12, when the company completed the reverse merger to go public.

From care to managing influencers

Clubhouse Media (formerly called West of Hudson) was launched last March by CEO Amir Ben-Yohanan, attorney and company chairman Chris Young and Daisy Keech, a social media influencer with millions of followers who had just left another high-profile house. The company wanted to launch their own home, where Keech would bring some friends. (Keech has since moved to focus on its own brands.)

Creator mansions usually house a handful of influencers at any given time, serving as a sharing agency and a partially comprehensive set, allowing them to create continuous content, monetizing them with a lavish backdrop. Rather than paying rent or fees for things like housekeeping, creators often provide promotional content for advertisers or the home itself.

By pooling a handful of influencers, they can also cross-promote and increase their reach. The company said in a January filing that one of its influencers grew its Instagram followers from 3.22 million to 5.2 million in just four months, while their TikTok followers grew from 3.4 million to 6.2 million. have risen.

Young said Clubhouse Media is working with the creators on traditional brand deals and charging a 20% fee. They also create intellectual properties that they can license and make money from. Video makers would make YouTube videos, for example. In one instance, Young said one of their homes is generating enough revenue from Google’s AdSense to pay the rent.

The company also has a kind of business incubator.

“The idea was to acquire or start companies, or to hold stock in companies that we could then use in our marketing department, which was our reach of influencers to drive top quality traffic,” he said. So far, the company has committed itself to only a handful of ventures, including nearly $ 400,000 to house member Lindsay Brewer’s racing career.

The company is also figuring out how to offer stock to its creators. Currently, one maker has shares in Clubhouse Media, with more to be added, Young said.

The company’s journey to the market was a bit unusual, especially since it was the first content house to do so. Rather than completing an IPO or SPAC, the public went through a reverse merger. The already public Tongji Healthcare Group took over the company in November, and the influencer’s management company got the reins.

Around the same time, the company filed for a name change to Clubhouse Media Group. It also changed its ticker symbol to “CMGR” from “TONJ.” That change did not materialize until January 20, when confusion over which company it was was well underway.

“When we got the [reverse takeover] transaction, when we bought that shell, we intended to always name it after the original name of our house, which was Clubhouse, ‘said Young, referring to the maker’s first home in Beverly Hills.

‘It’s a bit frustrating’

The timing was particularly bad as Clubhouse’s social media app opened up to a wider audience and expanded from the once-tight group of Silicon Valley investors and celebrities like Oprah Winfrey and Jared Leto. On March 14, it was downloaded 12.7 million times, according to mobile data and analytics company App Annie.

“It’s a bit frustrating,” Young told CNBC in a video interview earlier this month. “It’s a weird situation this year because we were so used to being the clubhouse last year and nobody knew about the clubhouse app. This year it has changed a little bit with everyone talking about the clubhouse app and there is confusion. “

“We’ve clearly done our best to avoid confusion. We’ve made public statements, we want to make sure shareholders don’t get confused: we don’t have any connection with them. We’re a different company,” he added to.

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

“I believe we were the first to be publicly active all over the Internet with a lot of press, and frankly I don’t know where the Clubhouse app is going,” he said. “There will be a lot of competition in the space, there will be 30 other competitors in the audio space that can survive, maybe not.”

Spokespersons for the app and Andreessen Horowitz did not respond to requests for comment on the confusion.

What’s next for Clubhouse Media

Creator houses are not a new concept, as the New York Times reported last January, although it seems like a new generation is quickly emerging with the rise of TikTok.

Still, Clubhouse Media will have to work to convince investors that supporting influencers is a viable endeavor.

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

“There is significant doubt about Clubhouse Media’s ability to continue as a going concern as a result of their historical recurring losses and negative cash flows from operations, as well as their reliance on private equity and financing,” the company said on March 15. . The company expects to continue to report losses and negative cash flow for the foreseeable future, it added.

Young said earlier this month that the company will spend next year building a more robust and diverse revenue model. That could be anywhere from acquiring social media companies to software companies, such as digital agencies running brand deals, or software platforms that allow influencers to generate additional revenue.

Recently, Clubhouse Media purchased “The Tinder Blog,” a popular memo page with 4.2 million Instagram followers, for an undisclosed amount. In a press release announcing the deal, the company said that aggregator accounts such as the blog “provide highly sustainable and scalable businesses that complement our mission and portfolio.”

Clubhouse Media may also begin expanding its reach of content houses, saying in an filing this month that it plans to add two to four houses each year. Young said the company is currently looking to Miami; Austin, Texas; Scottsdale, Arizona; and Nashville, Tennessee, although nothing is set in stone. It could also go to Dubai and Bali internationally. The company now operates a total of five homes in California, Las Vegas and Europe, ranging in residents.

Ultimately, Young said he wanted to get past the confusion and establish Clubhouse Media as its own, successful company.

“It is important to know that we are a company that is active, we have been operating for a year now and we have great ambitions and I think a platform is really one of the few listed companies that invests in a diverse portfolio in the field from social media, ”he said.

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