How Clubhouse Drove Sign-ups & Engagement VIA Exclusivity ($1B in 8 Months)

ROI Overload Business, Tech & Growth Newsletter

  
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Happy belated 4th of July or Canada Day (July 1st) depending on where you're reading this!

I hope everyone had a great long weekend.

If you’ve noticed, you’ll have gotten some of my new, daily emails.

So far the reception seems to be quite positive, so I’m going to keep these up and slowly transition them into a paid, only subscription service.

This weekly newsletter, will still always be free.

Today, I’m going to break down how Clubhouse grew to a $1b dollar evaluation in 8 months, you’re going to hear me chat with Chris Upperman, who manages Governance & Strategy at Facebook (including working with their Oversight Board).

He’s also worked with the Obama administration and was on the Biden/Harris transition team. He was an extremely impressive individual and interview.

Then I’ll cover a new book I just started, ‘Can’t Hurt Me’ by David Goggins, show you a cofounder matching tool you can use if you’re starting a business and rant a little about the power of saying ‘no’.

Here’s what’s coming up this week.


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📈 Case Study: How Clubhouse Drove Sign-ups & Engagement VIA Exclusivity ($1B in 8 Months)

In the wake of the pandemic, many corporations fell into the pitfall of tunnel vision, focusing only on restrictions and limitations.

A few companies, however, recognized an opportunity in an otherwise unattainable situation and sought to take advantage of it. 

The transformation of Clubhouse from a startup to a $1 billion business in eight months was among the most remarkable, fascinating, and brilliant growth stories in history.

A Brief Introduction

Rohan Seth and Paul Davison launched Clubhouse in April 2020 as an audio-only social media platform.

The company’s growth was largely driven by three aspects - influencer marketing, their strong ties to the Silicon Valley tech community, and their beautifully crafted products. Many people use Clubhouse to expand their professional and personal networks.

Let us now begin this case study by taking a look at the first two months when clubhouse launched (April 2020, May 2020) to discover why Clubhouse was such a massive hit during this time. 

Using Their Reputation As An Advantage

The founders Rohan Seth and Paul Davison leveraged their reputation and network to reach influential figures. Clubhouse accessed its market via the promotion of mega-influencers such as Drake, Elon Musk, and Oprah Winfrey. 

Without a doubt, an endorsement from a large influencer will draw a lot of attention to your product. It is impressive that Clubhouse managed to attract such high-caliber influencers within the first two months of the app's release. These mega influencers brought what was still an app in its infancy to the attention of everyone in Silicon Valley and the rest of the world.

All of this was made possible by Seth and Davison's network. As well-established members of the Silicon Valley tech community and the venture capital community, Seth and Davison have created a strong network of high-net-worth individuals. 

As a matter of fact, no less than four technology startups have been co-founded by the duo.

One of these is the Highlight application, which was purchased by Pinterest.

Again, their ties to the tech and venture capital community proved useful as they managed to procure funding of $12 million from Andreessen Horowitz, a private American venture capital firm. This investment was an impressive coup for Clubhouse.

Common Misfortunes Of Silicon Valley Startups

To understand Clubhouse's early success properly, we must look at Silicon Valley in its broader context. 

In Silicon Valley, startups often fail in their first year due to several factors such as lack of funding, investors pulling out, and hiring the wrong people. This commonly happens when the personalities, ambitions, and goals of the founders do not align. As a consequence, the company becomes fragmented and divided. 

On top of that, venture capital companies are known for being risk-averse and may deny companies funding when they most need it. 

This makes it clear that the factors that cause Silicon Valley tech startups to fail would also determine Clubhouse's success.

The founders' network and reputation, along with their brilliant and invite-only approach, provided a successful route to market awareness and resulted in a highly lucrative investment opportunity.

Intuitive and Familiar Design

Social media would struggle to gain the approval of the wider community without a flawless user interface and user experience. It is common for a product to garner short-term attention, but without a high-quality design, it is impossible to maintain the same level of engagement. 

A key feature that sets Clubhouse apart from its competitors is that users do not need to look at the screen once they have chosen a conversation to join. This makes it extremely convenient for them because they can use the platform on the go, pretty much like a live podcast. 

Users have the freedom to use the app while they are driving, running, or even studying.

This results in Clubhouse generating similar levels of screen time to Spotify.

High levels of screen time lead to a higher ranking in the app store and, for Clubhouse, this means more downloads and therefore more attention from investors. 

Open-Networking with FOMO

The second advantage of Clubhouse is its open networking structure. 

In essence, this means you have no restrictions in using the app. It is entirely up to you to decide where you will go and who you will meet. You can move into and out of Clubhouse rooms, observing conversations, getting involved, or even contributing to the discussion.

However, there are no archives of Clubhouse conversations, so if you missed the live show, you're out of luck. 

For this reason, whenever a celebrity announces that they are hosting a Clubhouse conversation, it generates a lot of interest, and influencers take notice. Clubhouse uses this clever strategy to play on people's natural fear of missing out.

Invite-Only

Clubhouse operates on an invitation-only basis.

By December 2020, it had over 600,000 members on the one hand and celebrities running the show on the other. Now, it has over 10 million weekly active users. 

The platform has a very exclusive feel and is viewed from the outside as mysterious and unexplainable, which presents desperation for those who wish to be involved. As a result of their exclusivity, Clubhouse invites were later inevitably assigned a monetary value.

Within a few months, members began selling their limited invites to waiting users. 

Summary

A tech startup's first few months are crucial to its success. In general, securing funding and establishing a viable path to market are extremely important. 

Although Seth and Davison’s networks may have played a significant role in the success of Clubhouse, it would be unwise to assume that you could reach this point solely based on good connections. They navigated their startup brilliantly by not repeating the mistakes of their predecessors and by focusing on their ultimate goal. 

Moreover, Clubhouse created an immaculate environment centered on exclusivity. Their invitation-only strategy added more mystery and attraction to their platform, and their ties to the tech community enabled them to quickly gain access to the influencer community.

All of this led Clubhouse to be the $4 billion company that it is today.

Top 11 Lessons From Clubhouse

  1. Reputation and network can expedite anything you’re taking on. Job hunt, startup, etc. They used their network to leverage startup capital as well as influencers for their take to market strategy.

  2. Influencer marketing works... when done right. 

  3. An overnight success, takes years. This was the 4th successful tech venture by the two co-founders.

  4. FOMO and exclusivity will always drive people to want to be “in”. Make something that people value, and make it exclusive.

  5. Product led growth is important. Part of the appeal of the app, was the intuitiveness and user-friendly ui/ux.

  6. Have a strong take to market strategy. They didn’t launch the product and hope people signed up. The launch and strategy was purposeful and executed flawlessly.

  7. Creating a community is hard, but when done right, in a novel way - it’s a billion-dollar business idea.

  8. Audio is powerful and intimate, even at scale. You don’t always need to have your camera on.

  9. Build a product that focuses on inclusion and acceptance. The nature of Clubhouse prompted moderators to make people feel welcome. A stark contrast from other social media platforms.

  10. Build community into every part of the app. Even after joining, you’re instantly notified when other members of your social network join, to increase the chances of you staying with & using the app.

  11. First impressions matter. Regarding ui/ux and onboarding. The process is simple, intuitive and non-invasive. Signing up makes sense, and you don’t feel as though the app knows every intimate detail about your life.


💻 SaaS Of The Week: Co-Founder Matching

So this isn’t exactly a SaaS, but it’s still incredibly useful, and I didn’t have anywhere else to put it, so it’s going here.

Y Combinator has just rolled out a Co-Founder matching tool.

To date, they’ve made 9000 matches across 4500 founders, and 3 companies who met through their platform got accepted into the YC Summer 2021 cohort!

If you’re looking for a co-founder - this is a perfect place to start.

Check It Out


🎧 Things You Should Listen To: Chris Upperman, Governance & Strategy for Facebook

Chris has an incredible career story.

From the White House mailroom, to Facebook, where he is currently the Manager of Governance & Strategic Initiatives for Facebook (including working with their Oversight Board).

This is an interview you’ll want to listen to.

Previous to his role at Facebook, he has worked in the Obama administration as well as on the Biden Harris transition team.

Chris also serves on several advisory councils including the Obama Foundation’s My Brother’s Keeper Alliance, the National Black MBA Association, NextGen Chamber of Commerce, most recently, has been named Chairman of the Advisory Board of Law Champs, as well as a Member of its Board of Directors, and was a Center for American Progress (CAP) Leadership Institute Fellow in 2012.

This is what we get into.

  • 02:54 - Chris’s origin story.

  • 10:24 - Working for free in the mailroom of the White House.

  • 13:52 - Civic engagement ecosystem.

  • 23:38 - Eleanor Holmes.

  • 32:49 -  Where did you have the greater impact? Government or Facebook?

  • 37:37 - Capitol Hill, back to the White House, and then over to the SBA.

  • 45:36 - Equal opportunity legal access.

  • 1:01:57 - Benefiting marginalized groups.

  • 1:05:10 - Career challenges.

  • 1:19:10 - Don’t internalize too much, & tips for Chris’s younger self.


📚 Things You Should Read: Can’t Hurt Me by David Goggins

Just last week I found an amazing book store and picked up about 100 new books I want to get through, so this section will be lit for a while.

I don’t know if I’ll finish a full hard copy once a week, but I’ll audible if I need to.

Can’t Hurt Me by David Goggins was the first book out of the pile I dove into, simply because I’ve seen him all over podcasts & on YouTube and I know he’s a certified badass.

Get It On Amazon

In this book, he tees up his origin story, which wasn’t a walk in the park.

Walks through his military career, and speaks through the hardships he’s lived through.

I can’t do this book justice. At a high level, it’s really just a story of his life, but it is incredibly inspiring.

Basically, any issues you’re dealing with right now, will seem very overcome-able after you read this book.

This book gives you a kind of ‘conquer the world energy’ that I’ve never really felt after reading anything else.

Highly recommend, it definitely lives up to the larger-than-life personality that David Goggins exuberates.


🧠 Scott’s Thoughts: The Art Of Saying ‘No’

Tony Blair said, “The art of leadership is saying no, not saying yes.”

There is an inherint danger when saying yes.

It dilutes your time, attention and effectiveness at the cost of being ‘polite’.

But is it really polite to say yes, when you do take on more than you can and deliver sub-par results across the board?

Saying yes when you should say no lets others steer your life.

Don’t shirk responsibilities, but also know what your responsibilities truly are.

Defend your time and your schedule.

Know that saying ‘no’ will always produce a more amicable outcome for all parties involved than an inauthentic, ‘yes’.

Sometimes, we are so afraid of disappointing people that we give in and say yes to everything.

Master the art of saying no, and you’ll master your time, happiness, health and your life.

— Scott ✌️


Podcast

If you like the content in this newsletter, there’s a pretty good chance you’ll like my podcast, “Success Story”, where I unpack the playbooks of entrepreneurs, executives and other high performing individuals.

Check Out The Podcast


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-Scott

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