Back in late January, Clubhouse—an audio-based social networking startup—confirmed it had closed on a $100 million Series B round (led by Andreesen Horowitz), reportedly at a $1 billion valuation. However, despite the company’s newly minted unicorn status, the invite-only iPhone app remained largely under the radar outside of Silicon Valley circles. That changed on Jan. 31, when an unexpected conversation between Tesla founder Elon Musk and Robinhood CEO Vlad Tenev brought Clubhouse into the mainstream lexicon, sparking a secondary market for invite codes in the process (each user receives a limited number of invitations to dole out during the pre-launch period). With the drop-in audio platform gaining momentum—roughly a third of the app’s 3.5 million-plus downloads came within the last week—it seemed like an opportune time to explore if/how Clubhouse is likely to affect the sports ecosystem (the company declined an opportunity to share its thoughts). Conversations with a tech-savvy venture capitalist and a sports media investor/adviser painted vastly differing views on the subject.
Our Take: Peter Rojas (partner, Betaworks Ventures) has long been a believer that social audio can play a prominent role within the existing media landscape. Back in 2015, he invested in a mobile voice-messaging app called Unmute that served a similar function (but was just a bit ahead of its time). He says the ease with which creators can produce audio-only content, and the ability for both the audience and creators to go in depth on topics, differentiates the platform from other creator-driven social networks in the marketplace. Of course, audio-only channels are well-suited for deep conversations because “it can be easier for audiences to listen in to longer, more nuanced conversations when they can do it in the background of something else they are doing, like driving or working out,” Rojas explained. By contrast, “You don’t necessarily want to sit and watch a two hour YouTube video of people discussing something,” he said.
Considering people love to talk about sports, one would think there is a use case for social audio. But John Kosner (founder, Kosner Media) remains skeptical that a drop-in audio app is the “best format” for fans to consume sports-talk programming. “Podcasting is a more efficient way to find what you want to find out, when you want to find out, and there is virtually an unlimited supply of podcasts,” he explained. Remember, Clubhouse conversations aren’t always going to be taking place at a convenient time, and you can’t fast-forward through them. Old-fashioned AM radio also still exists (the business remains healthier than one might think) and serves the older fans’ need for real-time, in-depth discussion. Kosner did acknowledge “Clubhouse is relatively new, so obviously it will add product features and capabilities.”
Rojas, on the other hand, doesn’t see Clubhouse as a competitor to existing media channels. He says podcasts, radio and social audio are not mutually exclusive, and each can serve a purpose. “Platforms that open [access] up to people who didn’t have the ability to participate before are expanding the media ecosystem. It’s a different audience and different dollars in a lot of cases; and I would never bet against people finding more time to consume the media content they love.”
While it remains to be seen if sports fan will regularly make the time for social audio consumption on top of everything else, Clubhouse does appear to be chasing different dollars than those playing in the podcasting or radio space. Unlike those advertising reliant businesses, Clubhouse plans to drive much of its revenue via subscriptions (presumably to schedule shows hosted by engaging voices) and ticketed events (think: Musk-Tenev chat). The company will retain a percentage of the revenue generated by their creators, no different than Patreon or Substack. The company’s latest round of funding will in part be used to establish a “creators fund”—money to entice talent to participate on the platform.
Reaching critical mass (think: 100 million active monthly users) will help Clubhouse retain creators once they are on the platform. But Kosner said, “It’s not clear how [the platform] scales or gets to a level that really makes it an important part of the sports ecosystem”—even with plans to make invites more widely available and introduce an Android app. The former EVP of digital at ESPN sees the transition from “digital in-crowd” to average Joe as a difficult one to make (there are also moderation issues that need to be addressed). “It’s more likely [the app] serves just a certain small segment of sports fans and is not a big factor in sports anytime soon,” he said.
Rojas balked at the suggestion Clubhouse’s current exclusive nature would be a long-term headwind for the company. “A lot of these [social networks] started as sort of insider, Silicon Valley [apps],” he said. “Twitter started out that way too. The audience ends up expanding.”
In addition, Rojas said, “The sense of proximity and immediacy offered by Clubhouse is really, really powerful.” But considering the rise of the social audio platform has come in the midst of a global pandemic (launched in April ’20), it’s fair to wonder—as Kosner did—“how much of the popularity is because we’re stuck in our homes and have time on our hands. When people are going back out and [regularly interacting with others] will something like [Clubhouse] be as popular?” The answer may determine whether the app will end up playing a prominent role in sports.
Considering the buzz around Clubhouse (see: Clubhouse Media Group, a totally unrelated company, saw its stock price rise as much as 117% on Feb. 1), it is no surprise there are “fast followers” positioning themselves as “Clubhouse for sports.” Even if social audio catches on in sports, it remains to been seen if whether it’s best suited to be verticalized around specific communities (like LockerRoom) or constructed as a broader platform where users can seek out the specific type of content or community they’re interested in (like Clubhouse). It’s possible both platforms could find a dedicated following—though Clubhouse undeniably has more momentum right now.
And as Rojas said, “Momentum has a way of compounding itself.”