How to Make Money From Clubhouse

A new era for venture capital and social media is emerging with this social app, and users could get rich from it if they act now.

It used to be that venture capital investors were the ‘behind-the-scenes’ money managers, quietly working their connections and influence to help startups grow their business.

Not any more.

With the new social media app Clubhouse, they are moving from coaches on the bench to players on the field.

Money managers cum social media influencers

Beta launched in March 2020, Clubhouse had just 1,500 users in May 2020 but was valued at US$100 million after a US$10 million seed round led by one of the most respected venture capital firm in the world — Andreesen Horowitz (a16z). On January 24th, 2021, after amassing just two million users, a16z invested another US$100 million at a valuation of one billion, officially turning Clubhouse into a unicorn.

If you haven’t heard about Clubhouse, it’s a simple app that allows users to create what basically amounts to a virtual version of those panel discussions usually held onstage at big conferences.

There are three roles that users can take on — moderators, speakers and listeners. The moderator(s) creates and controls a room, sets the topic and invite speakers to share their thoughts. Users can drop in and out freely as listeners. They can also ‘raise their hands’ to ask questions or get invited by the moderators to become a speaker.

Marc Andreesen and Ben Horowitz, the founders of a16z, have been appearing regularly in Clubhouse as speakers, in addition to inviting celebrity friends like MC Hammer, Drake, Tiffany Haddish, Ashton Kutcher, Chris Rock and many others to appear.

Their firm’s partners, and even spouses, also regularly host sessions, making it a truly unprecedented modus operandi where the institutional investors are getting directly involved in marketing their investee companies.

With this sort of celebrity draw and the exclusive ‘invite only’ system (each new user can only invite two other friends to join the app), Clubhouse soon became the new ‘in-thing’ among VCs and the tech savvy.

If you have capital

The average investor would normally not be able to access the startup scene unless you had enough wealth to be an angel investor.

But with Clubhouse a unique and rare situation has occurred.

It is rumored — and now generally held to be true — that Clubhouse was built in just a week using solutions provided by a company called Agora Inc.

Agora is a company listed on NASDAQ that provides users with technology that enables them to add audio or video live streaming into their apps.

Since its IPO in June 2020, Agora’s stock price has hovered around the US$35-55 range. Then all of a sudden on February 1st, 2021, it broke out of that range and skyrocketed to just under US$100.

That was the day Elon Musk appeared in a Clubhouse discussion along with Robinhood founder Vladimir Tenev, causing Clubhouse to immediately attract more than 1.1 million new users in just six days. Barely four days later, Mark Zuckerberg also showed up in a Clubhouse session.

The common thread tying all these entrepreneur superstars together is Marc Andreesen. His venture firm a16z funded both Facebook and Robinhood. As for Musk, Andreesen has long been a public admirer of him — going as far as to call him “a national treasure” back in April 2020 and “deservedly a legend” in 2017. I’d be surprised if they weren’t friends…

Agora as a proxy for Clubhouse’s success

Agora has neither admitted nor denied their connection to Clubhouse despite all the media hype and inquiries. But strangely they were willing to come out and defend their data privacy policies in an exclusive interview with the South China Morning Post after Elon Musk brought Clubhouse into the limelight and users voiced concern over the platform’s privacy management.

It may also be a strange coincidence that, on the day Musk appeared on Clubhouse, Agora also announced a US$250 million private placement of shares in their company to a single, undisclosed “accredited investor” (read: very wealthy person).

Clubhouse reportedly only has 10 staff right now. So based on my experience, it is probably true that they leveraged on external technology to build the app. The complicated backend infrastructure needed to support voice streaming of this scale is just too much for a small team to develop from ground up in a short period of time, even if all of them were techies!

And despite its recent user boom and US$100 million raised, Agora isn’t aggressively hiring computer engineers. Of the seven positions currently listed on its website, only three were technical.

For the sole Backend Engineer position they are hiring, the skillsets listed were for managing cloud services from AWS. Nothing mentioned hinted at coding or software skills needed for a proprietary voice streaming system.

Clubhouse is probably using Agora and will stick to it for some time to come.

Agora’s pricing model is based on usage volume (US$0.99 per 1000 minutes of voice streaming). As Clubhouse grows, so will Agora’s revenue. Clubhouse only has a few million active users right now and is only available on iOS. It still has a long way to go!

This means that Agora’s stock price also has a long way to go to benefit from Clubhouse as it grows in popularity. Even if Clubhouse did try to build their own technology to replace Agora, it would take time to hire the right people, build, test and carefully plan a switchover.

If you don’t have capital

However, if you don’t have the spare cash or risk appetite to buy Agora shares, you can still benefit from Clubhouse by being an influencer or creator on it.

Clubhouse has announced that it will be introducing features to help its creators get paid.

“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.”

If you feel like you’ve missed out on YouTube and Instagram, where influencers who were early enough in the game made millions, or don’t have any talents to show off on video based platforms like TikTok, this is your second chance.

As a platform Clubhouse has no video — just voice. All you need is the willingness to speak and be knowledgeable enough in any subject matter of your choice to draw a crowd and following.

Based on the monetization features described by Clubhouse, it sounds like if you can build a following on the platform and host talks regularly, or move existing physical events onto the app, you will be able to make money.

Even without Clubhouse rolling out monetization features, enterprising users are already making money off it.

Sinem Günel, a writer on Medium, shared how her partner Philip is getting paid $150 per hour to be a moderator on Clubhouse for other people/companies — having spent time to learn and network on the app, building both a following and a reputation for being a capable moderator.

Joel Eisenberg, another medium writer and self-professed Clubhouse addict, claims to have received calls from agents and producers looking to collaborate with him. He also said, “A television series is presently being negotiated for another room hosted by a friend.”

Once in a blue moon

Social media and mobile apps have become a high-level game which requires deep technical expertise and billions of marketing dollars. It is no longer an arena in which startups can get into easily, much less threaten the existing incumbent giants.

Mobile Apps Are No Longer a Good Idea for Startups
From something cool a 9-year old could code, mobile apps have become a knowledge and capital intensive game tangled up…

It is rare that a startup in this space can grow this big, this fast, and also have the support of the industry from both top tier venture capital and other successful techies like Zuckerberg and Musk.

(The last time a social startup got this lucky and displaced dominant players was a ‘pokey’ little website called Facebook which kept initial access exclusive too.)

Anyway, what I’m trying to say is: Clubhouse is being intentionally engineered for great success by some of the most powerful players in the ecosystem.

Don’t miss this one. 👋