Clubhouse is making a major reboot: The once-buzzy audio-livestreaming social app is laying off more than half its staff in what founders say is a necessary strategy pivot.
Clubhouse founders Paul Davison and Rohan Seth announced the layoffs in a memo to employees Thursday. “We arrived at this conclusion reluctantly, as we have years of runway remaining and do not feel immediate pressure to reduce costs,” they said. “But we believe that a smaller team will give us focus and speed, and help us launch the next evolution of the product.”
San Francisco-based Clubhouse had close to 100 employees, Davison said at the TechCrunch Disrupt conference last October.
Clubhouse has raised $110 million in funding and was reportedly valued at $4 billion. Investors include venture-capital firms Andreessen Horowitz (a16z) and Kortschak Investments. Twitter, prior to Elon Musk’s acquisition, had been in talks to buy Clubhouse for $4 billion, according to a 2021 report by Bloomberg.
The company’s founders said “we would not be making this change if we didn’t feel it was absolutely necessary.” Launched in April 2020 at the outset of the global COVID pandemic, Clubhouse had gained traction for the app’s live audio discussions (and spurred Facebook and Twitter to build a copycat features).
According to Davison and Seth, “as the world has opened up post-Covid, it’s become harder for many people to find their friends on Clubhouse and to fit long conversations into their daily lives. To find its role in the world, the product needs to evolve. This requires a period of change… In order to fix this we need to reset the company, eliminate roles and take it down to a smaller, product-focused team.”
The founders didn’t detail their vision for what “Clubhouse 2.0” will look like but they said slashing the workforce will allow a “leaner” team to accelerate development.
According to the Clubhouse founders’ memo, the company will pay severance through the end of April plus four months of salary (through Aug. 31). It also is accelerating stock options to be fully vested as of August 2023.
“We will always be grateful for the role that each of you has played in building Clubhouse and we would rehire any of you in a second if we could,” Davison and Seth wrote. “Our hope is to rebuild and one day earn the right to do that.”
