Another startup valuation bubble? Clubhouse, a social media app with less than 5,000 beta users, is already worth $100 million

A couple of days ago, we told you about WeWork, the embattled office-sharing unicorn startup that was once valued at $47 billion a year ago. Today, SoftBank, one of the leading investor, now values the company at only $2.9 billion. WeWork is not alone in the valuation bubble. Uber, Jolt, Lyft, Fair and UiPath have all lost significant value and are laying off their employees.

Today, CNBC wrote a piece about Clubhouse, a social media app startup. According to the report, Silicon Valley is going crazy after the app as celebrities and high-profile venture capitalists promote it. The app, which is still in beta, no revenue, and only 1,500 users, is already worth $100 million. Think about that for a moment. We’ve seen this playbook before.

Remember Neighborly, a startup backed by Ashton Kutcher? In its early days, Neighborly received media attentions, PR and many more. But that all fizzles out at the end. The California startup was once sought to upend the way securities are sold in the $3.8 trillion municipal-bond market. At its peak, Neighborly raised a total of $30.7 million before finally shutting down in 2019. In October 2019, Neighborly tells employees it can’t make payroll, according to a memo obtained by Bloomberg News.

The question is, what is the valuation based on? According to a new funding report, Clubhouse recently raised $12 million from a respected VC firm, Andreessen Horowitz. The Clubhouse voice-based social media app currently has less than 5,000 beta test users. However, prospective listeners have to sign up for a waitlist via Google form, as the app is not yet in the Apple’s App Store. Clubhouse was founded by Paul Davidson and Rohan Seth. According to information they posted about the app, the duo “previously launched an audio app Talk Show before this which didn’t seem to gather the same attention Clubhouse has been getting.”

But why is Clubhouse worth $100 million? It turns out Clubhouse is the only audio-based social app that lets people jump into chat rooms together. The app lets users spontaneously join group chats with people they don’t necessarily have a prior connection with.

Bilal Zuberi, a partner at venture firm Lux Capital, said Clubhouse is the only social audio app that’s captured his interest. “Almost all social media requires us to look at a screen,” said Zuberi, whose firm has offices in New York and Menlo Park, California. “This is the first one where I’m not looking at a screen. I’m involved in social media but I’m sitting by the pool with my kids and as long as I’m muted and not speaking, it’s great.”

It is worth noting that just a few months ago, Clubhouse had zero users. Now with $12 million in financial war chest and backings from celebrities, Clubhouse is getting all the publicity and attention from major news media outlets, including New York Times. So far, Clubhouse is not disclosing the total number of invites. However, the average number of daily users is currently about 270, or roughly 18% of the total number of signups, according to CNBC, citing a person close to the company.

Clubhouse continues to generate social media buzz. We wish them well.

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