Clubhouse was worth $4B at the height of the pandemic — then the users left

Clubhouse was an invite-only audio app that let people drop into live conversation rooms. It launched into a world in lockdown, and for a moment it was the app of the pandemic — a place where anyone could listen to celebrities, founders and strangers talk live. The money followed the buzz: Andreessen Horowitz had invested $10 million when the company was valued at $100 million and had only about 5,000 users. By January 2021 it was worth $1 billion with 2 million users, and within weeks it had reached roughly 10 million weekly users and a $4 billion valuation.

The problem was that the buzz was the moment, not the product. Clubhouse had been built for a locked-down world with little else to do; it had no real hook to keep people once their lives reopened. As lockdowns eased through 2021, downloads fell by roughly 80 to 90 percent year over year, and the larger platforms moved in — Twitter and others shipped their own live-audio features, copying the core idea without the invite-only mystique.

The company tried to reset. In April 2023 Clubhouse laid off more than half of its employees, the second of several rounds of cuts, as it shrank back from the empire the $4 billion valuation had implied. Twitter had once weighed buying it for about $4 billion; that deal never happened, and the valuation it was based on had long since evaporated.

Clubhouse is the textbook case of a hype cycle. A product can be the most talked-about thing in the world and still have no reason for people to stay; when the moment that created the demand passed, and the feature became a commodity, the users — and the value built on top of them — left with it.