The buzz in the clubhouse is already fading, but Andreessen Horowitz is not deterred

Clubhouse audio app was all the rage earlier this year, but there are signs the buzz around it is starting to dissipate.

In February, Tesla CEO Elon Musk and Facebook CEO Mark Zuckerberg hopped onto Clubhouse within days of each other, when the social chat app started to take off.

Musk even asked Russian President Vladimir Putin to join him on the platform. But fast forward to today, and some of the hype seems to have disappeared.

The invitation-only iPhone app, which celebrated its first anniversary last month, allows users to search and listen to conversations between groups of people. It was quickly embraced by Silicon Valley types, and it was backed by well-known venture capital firm Andreessen Horowitz (whose co-founder speaks on the app from time to time) in a round of funding in January that reportedly valued it at $ 1 billion.

On Sunday, Clubhouse confirmed that Andreessen has led a new Series C funding round after The Information broke the news on Friday. The latest round of investment, including new lenders DST Global and Tiger Global Management, reportedly values ​​the company at $ 4 billion. But investors seem to be more optimistic than many of the app’s users.

While some people were desperate for a clubhouse invite, some users already on the platform don’t see the long-term appeal. Clubhouse, which was founded in April 2020 by Paul Davison and Rohan Seth, did not immediately respond to a CNBC request for comment.

“I think the first FOMO about getting a clubhouse invite and trying it out has died down,” social media analyst Matt Navarra told CNBC.

One of the main problems with Clubhouse is that there is a lack of relevant conversations or rooms that users see when they open the app.

“I tried to get in for a while, but the only rooms it showed me were run by the kind of people who unironically call themselves ‘growth hackers,'” one user told CNBC, adding that it felt like social managers. media arrived. for everyone.

Navarre said Clubhouse’s challenge “is to make sure that when you open the app, you discover lots of great rooms and speakers every time.”

He added, “The content quality issue is only getting more difficult as more users are added and the quality content is watered down. Just like when Meerkat users started seeing endless boring live streams, Clubhouse is full of spam, scams and snake oil sellers. “

Timothy Armoo, CEO of Fanbytes, a company that helps brands advertise through social video, told CNBC that “showing the right people the right things at the right time” is a “tough problem” and it can’t scale.

“The elitists have left the building. Marc Andreessen is no longer doing things. The appeal of Clubhouse was that you could eavesdrop on interesting convos from interesting people. What’s the point now that the interesting people have left?”

Armoo ​​noted that the buzz around the clubhouse is also disappearing as people can now go out as Covid restrictions are relaxed in countries like the UK and US.

Despite initial fanfare, Clubhouse had been downloaded just 14.2 million times on April 14, according to data shared with CNBC by app tracking company App Annie. Meanwhile, social platforms such as Facebook, Instagram, YouTube and Twitter have billions of users.

According to a spokesperson for App Annie, the downloads in the clubhouse have stabilized. “As with most app launches, there is always a massive download that decreases in the first few weeks,” she said.

By comparison, TikTok was downloaded 500 million times in the five months leading up to April 2020, bringing the total number of downloads to 2 billion, according to app analytics company Sensor Tower. Elsewhere, the mobile game Pokemon Go with augmented reality was downloaded more than 500 million times within a few months of going live, according to research firm Statista.

Some clubhouse users who organize events through the app have looked for alternative options.

Sara Essa, the creator of Sustainability Hub, which hosts several weekly events at Clubhouse for its 41,400 members, told CNBC she is considering a different platform.

“I’m trying to get my community off the platform and host our lectures elsewhere,” said Essa, who claims Sustainability Hub is the largest climate community at Clubhouse.

She said “people are leaving” quickly because Clubhouse changed its algorithm and accused the company of not listening to user feedback.

Finding a new platform is Essa’s “biggest hurdle right now,” but she’s considering the online events app Hopin, which has a valuation of $ 5.65 billion despite being less than two years old. She’s less keen on using Twitter’s Clubhouse rival, Twitter Spaces.

“Twitter Spaces wouldn’t work,” she said, adding that she’s not a big fan of it. “A lot of people don’t use Twitter, so it will alienate a lot of people.”

Meanwhile, Mike Butcher, the editor-in-chief of tech news site TechCrunch and host of “The Tech Media Weekly Wrap,” left Clubhouse last month in favor of Twitter Spaces. However, the trip was short-lived.

“Folks – I think we should go back to our old Clubhouse chase,” Butcher told speakers he invited to the show via Twitter after hosting just two events on Twitter Spaces. “I’m all set to return to Twitter Spaces at a later stage once they’ve fixed the bugs and added Android, but there are some issues.”

Twitter Spaces crashed not only in front of Butcher’s speakers, but also in front of him, causing the entire show to go off the air. “It ended the room!” Butcher told speakers at a live event. “Had to reboot the whole room! Lost audience!”

He also criticized Twitter Spaces for: the low sound quality; an inability to “pre-book” or schedule a Space, making it difficult to advertise; and low visitor numbers compared to Clubhouse. He came in at around 40-50 on Twitter Spaces versus 150 plus on Clubhouse. Twitter did not immediately respond to a CNBC request for comment.

“Obviously, the ‘shiny new thing effect’ diminished after a while with Clubhouse,” Butcher told CNBC. “There are only a limited number of random, poorly curated discussions people can have. So I moved my regular show to Twitter Spaces to put ‘reach’ over novelty, given the popularity of Twitter. problems, I think we’ll be back. Clubhouse will have to get out of its cliquish culture to succeed. ”

Earlier this month, Bloomberg reported that Twitter was also looking to buy Clubhouse for about $ 4 billion. It came a few days after Bloomberg reported that Clubhouse was in talks to raise funding from investors in a round that would value the company at approximately $ 4 billion.

And there could be more competition along the way.

Reports suggest Facebook is working on its own clubhouse competitor. Screenshots published by TechCrunch in March suggest that Facebook’s audio product will be an extension of Facebook’s existing Messenger Rooms, as opposed to a standalone app.

Meanwhile, LinkedIn, Slack and Spotify are also working on competing products, according to reports.

Technical analyst Benedict Evans, a former partner at venture firm Andreessen Horowitz, told CNBC that “drop-in audio chat” could eventually be used anywhere, just as “stories” are now ubiquitous on social media platforms.

“But the network you add them to matters, and it’s not interchangeable, and the mechanics of connecting them may be more important than the format – that’s why TikTok works,” he said via email.

Facebook could add ‘stories’ to everything, but they can’t add ‘TikToks’ (AKA Reels) to everything because it’s about the consumption model and the network, not ‘short portrait video’. True) for audio chat – the point is how you do it and what network you connect it to, not just adding live audio. It’s like saying “Facebook adds status updates so Twitter is dead” – the point is the network. ”