Clubhouse Is Worth $1 Billion Off the Backs of Black Folks. Now What?

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Illustration for article titled Clubhouse Is Worth $1 Billion Off the Backs of Black Folks. Now What?
Photo: Yalcin Sonat (Shutterstock)

Clubhouse, the invite-only social audio app, recently announced it has raised another $100 million funding round, led by Ben Horowitz’s a16z fund. The app is now firmly a Silicon Valley Unicorn, a private startup valued at over $1 billion. This is a meteoric rise for an app that launched amidst the pandemic in 2020, with little-to-no initial fanfare outside of the tech and investor community. Now, Clubhouse boasts over two million weekly active users. Even in a golden age where venture capital money gets thrown around haphazardly, where Unicorn status seems easier to achieve than ever—shoddy business propositions be damned (Whatup Quibi! Good to see you again Juicero!)—Clubhouse is an unequivocal success story.

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The reaction to the announcement drew celebratory headlines from mainstream publications; Bloomberg proclaimed the app to be social media’s “next big star.” A LinkedIn News story asks if Clubhouse is the new “it platform.” On the other side of the internet, Black folks, seeing themselves once again at the early stage of the adoption curve of a social-first, creator-driven, personality-led social space, wondered aloud how they once again drove word of mouth, user growth and cultural value for a platform only to be left out of the press clippings, and more importantly, seemingly any of the subsequent financial windfalls.

Clubhouse’s spectacular ascension can be attributed to two complementary user acquisition tactics that have proven successful for launching startups, particularly in the app economy. The first is the psychological play on human desire and exclusivity that Google most notably employed with Gmail nearly two decades ago: the private invitation-only club. You couldn’t and still can’t just download Clubhouse and immediately start talking shit. You needed to know someone, already on the app and who had your phone number, directly send you an invite. Invites began circulating from the founders and investors to their social circles and their circles and widened from there. It was the exclusive social club that you wanted to wait in line for, even if you weren’t quite sure what you were waiting in line for.

And thus, being on Clubhouse became a badge of internet clout. To be on Clubhouse in June 2020 meant that you weren’t but a few degrees of separation from Chris Rock or Oprah. Unlike Gmail, users had five invitations to dole out to anyone in their contact list, creating an exponential network effect of talk amongst clout driven social circles that quickly ballooned out to other influencer types and eventually to general early adopters, of which Black people tend to over-index.

The second and perhaps more consequential strategy was a purposeful push to get influential Black talent to the app, specifically Black creators and creatives. In interviews, Clubhouse founders and investors acknowledge that they leveraged their ties to celebrity figures to bring them on the platform as first movers. Horowitz, in a since deleted tweet, said that Chris Lyons and Naithan Jones (Black board members of Andreesen Horowitz) “have put more people in Clubhouse than anyone.” Felicia Horowitz, the philanthropist-entrepreneur wife of Ben Horowitz (who is also Black) played a key role in recruiting influential figures for her now popular Saturday Night Dinner Parties, hosted on the app. The founders and investors were conscious of growing the app from the ground up with diversity as a central feature of the community. Even in the funding announcement post, the first topics of discussion cited are “social justice reform, BLM and anti-racism.”

And while this push for diversity may be sincere, it’s also true that much of the initial outreach went to Black musicians, comedians and influencers: the community of clout creation. They (and we) are well aware of the social and cultural influence that Black creators and entertainers have and the ability to leverage these personalized brands to build an audience wherever they land. So, they used personal connections to recruit these folks onto the platform then watched as those influencers’ fans and followers signed up, spending significant time on the app, and then racing to Twitter to talk about what was happening. This created a feedback loop of clout-driven discussion that only drove more interest in the app, from all corners of the internet, white and Black, who wanted to see what all of the cool kids were up to. As Dwight Schrute succinctly lays out in The Office, “I know how to build a business. You gotta’ get the black people to do it in order to get the white people to do it. Then you gotta’ get the black people to stop doing it. One step at a time.”

And the first step was ensuring that Black people were represented on the app. But, it wasn’t just that Black people used the app. Sure, Clubhouse increasingly started to resemble the group chat, but its creative evolution began almost immediately upon reaching higher levels of adoption amongst a wider Black audience. There were still roundtable discussions and audio advice columns, but Black people saw so much more potential and capitalized on it. Producer battles. Dating rooms. Studio Stories. Standup comedy. Black Twitter fights that spilled onto Clubhouse stages and vice versa. Colorism. Racism in the UK vs. the United States. The Lion King musical. Pull to Refresh. Meta money-making tips about Clubhouse, on Clubhouse.

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These are all formats and ideas that have been created and innovated by Black people using the app that earned mainstream eyeballs and are a core part of the app today. And Clubhouse was the perfect vehicle for this innovation due to its novelty and open-ended format. It was still nascent enough to be anything its users could dream up and if it weren’t for Clubhouse’s Black users, it may have never actualized as anything but LinkedIn but with audio, a networking app tech bros use to give each other SEO advice.

This is not to say that Clubhouse is literally a Black creation. The underlying fundamentals of the app may have ensured a median range of positive outcomes as a passive, audio-first social network—the first social network you could engage with while on other social media because it required your ears, not your eyes. It is the first social media for your headphones, where you can be an audience member or moderator of an intimate or stadium-style conversation, all while making dinner. And it has a much broader appeal than podcasts because of its FOMO inducing ephemerality, creating a sense of “you had to be there.” And Black people were there, innovating and reimagining the limits of what Clubhouse could be.

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In a recent New Yorker profile, Arthur Jafa describes the meaningful difference in the invention of something versus the form it eventually takes. He extols Marcel Duchamp and his gift for taking a thing that already existed and turning it into something else, specifically acknowledging Duchamp’s “Fountain” and its obvious influences from African sculpture. He then likens it to Black people and basketball.

“We didn’t invent basketball, but we created it. One of the more telling things about Black people is that we do things that don’t make our job easier. Why do a three-sixty before you land a basketball? You don’t get more points—it just raises your level of difficulty. What is that about?” (His voice went up about an octave.) “Folks argue that it’s entertainment, but it’s central to who we are. It’s refusing the structures that want to turn the game into a business.”

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Black people didn’t create Clubhouse. We didn’t write the code, pitch it to investors or develop the go-to-market plan. But we did invent it, play with it, reimagine it, make a mess of it and ultimately give it incalculable value in word of mouth. And now, it’s a big business.

This, of course, follows in a long and checkered history of individuals, corporations, and publications plundering and profiting off of Black creativity, discussion and art online only for those folks to be erased from the narrative. Kayla Newman, aka “Peaches Monroee” created an entirely new word (“on fleek”) that was emblazoned across Etsy shops of America and included in Webster’s Dictionary. When Kayla asked for our support back, she wasn’t able to come close to her crowdfunding goal to start her own beauty line, with a little over $20,000 in pledges of a $100,000 stated goal, despite providing millions of dollars in commercial gain for others.

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Entire Buzzfeed content streams are nothing more than screenshots of conversations happening within Black Twitter. TikTok was heavily influenced by the social video app, Triller, which recruited a host of Black creators and Black musicians to early investment. TikTok itself has come under fire for white users stealing the dances and trends of Black users and profiting from it. Vine, the six-second video app on which ‘On Fleek’ became legendary, saw ingenious creativity from its Black creators only to see white creators given seven-figure deals to become YouTube stars. Urban Dictionary was founded as a way to decipher neighborhood slang in colleges and became the informal internet dictionary until it crumbled under the weight of its own racism. And on, and on, and on.

The flagrant theft and appropriation of the past and present set the stage for the disgruntled reaction you see today whenever a company uses Black art for gain. There may not have been the flabbergasted reaction to the investment news if Black people didn’t feel like they’ve seen this story before. And, for every Relly B understanding of “where the money resides” there are hundreds of Kayla Newmans who don’t have the time, infrastructure, connections, or platform knowledge to capitalize on their sudden burst of celebrity. And with the internet’s infinitesimal attention span, once you’re gone, you’re gone.

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So, what is the responsibility of the platform, if any, given all of the above? Should rewarding early adopters and users be a condition of success? Does the platform owe its users an equity stake or financial payout? It would appear on the surface that Clubhouse is thinking of ways to acknowledge and invest in its burgeoning “Creator” community. In its fundraising post, “Investment in Creators” is a priority bullet, albeit the last one.

Creators are the lifeblood of Clubhouse, and we want to make sure that all of the amazing people who host conversations for others are getting recognized for their contributions. Over the next few months, we plan to launch our first tests to allow creators to get paid directly—through features like tipping, tickets or subscriptions. We will also be using a portion of the new funding round to roll out a Creator Grant Program to support emerging Clubhouse creators.

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As specific and intentional as Clubhouse was in its “diversity” recruitment strategy, it’s been just as vague with a strategy on how it might reward some of the very users that helped make it what it is. Furthermore, all of the Creator monetization tools noted above require you to stay on the platform to earn revenue, of which Clubhouse will surely take a percentage cut. They’ll front you some work but the unspoken agreement is that you’ll reinvest that back into the platform in some way.

If Clubhouse was truly invested in its community, and the success of its diverse community, it might apportion some of its recent funding to help its Creators launch the next Clubhouse, a venture fund for Black creators who have traditionally lacked access to capital. It might create an internal agency or partner with an agency to help its Creators capitalize on any instant fame with a more considered personal marketing and advertising plan. Clubhouse might fund original programming on the platform wherein the host/creator owns the IP. That’s true, long-term investment in a community, and this might all be on the roadmap, but forgive us if we feel like we’ve seen this movie before.

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Chris Lubin is a strategist, born and bred in New York City, who enjoys bad basketball with his New York Nicks and great rap music. He’s randomly tweeting at @mrlubin .

DISCUSSION

mooseheadu
ArtistAtLarge

Another social media website that produces nothing and is worth 1 billion dollars.

Nope, nothing dsytopian about that. Move along.