Apr 2, 2021

Is Clubhouse in Trouble?

By Keith Teare • Issue #250 • View online

It seems like the world is piling in on Clubhouse. In the video we discuss why? And is the world right or wrong?

Editorial

Clubhouse has created an entirely new category of media experience. A real-time conversation where a global audience can come together and listen to a speech or conversation, or any audio event, and where any audience member can be given the microphone and contribute thoughts or questions. This experience would only be possible with digital technology, the cloud, and real-time media services where there is zero latency. The CNN experience of a question only being answered after a few seconds delay can be a thing of the past. At the core of this is the capability to deliver interactive media, where a listener can also be a contributor. This has been possible before, but not at scale. A Zoom call that is streamed live to Youtube or Twitter or Facebook has an interactive core and an audience. But the two are separate. Clubhouse has integrated them in audio. Soon services like Millicast will make it possible to do so with video too.

This will make a revolution in what kinds of services software creators can offer. Like watching your favorite team’s game whilst sitting in a digital “private box” with family or friends and being able to speak to each other. And then perhaps the field side camera pulling you into a half-time interview for your thoughts on the game.

So Clubhouse pre-figures a future that will roll out over the next ten years.

But it is also experiencing its first road bump, as all startups do. This week it was revealed that Clubhouse app downloads were 73% lower in March than in February. A rush of articles and Tweets focused on this. Leading this week’s That Was The Week is an article by Stanford Behavioural Designer, Nir Eyal, author of Hooked: How to Build Habit-Forming Product. He explains what he describes as Clubhouse’s “fatal flaws”. After explaining that Clubhouse’s key gain is that it offers real-time “drop-in” audio he spells out that this new “habit” requires that there is always high-quality content 24/7 to drop in to.

While the app is red hot at the moment as hosts try it out for the first time, the company risks losing listeners if they can’t keep enough of the interesting content airing live around the clock. Users will abandon the habit if it doesn’t give them the instant entertainment they’re looking for.

I agree. The content quality, which equates to participant quality, will be the greatest challenge facing Clubhouse. Its fight with other real-time audio platforms (new ones this week announced by Linkedin and Spotify) will be won or lost on that.

Clubhouse is used by 2% of adult Americans. Facebook has 68%. That is a lot of future growth if Clubhouse can own the experience. I’m still betting on it. I suspect Twitter, Fireside, Facebook, Linkedin, Spotify will struggle with quality content more than Clubhouse.

Lots of other talking points in the sections below which we will cover in this week’s Video.

Content

Is Clubhouse having a near-death moment?

Will Clubhouse be a Habit or a Has-Been? | by Nir Eyal | Mar, 2021 | OneZero

Clubhouse [has]… some potentially fatal flaws the company must watch out for if it is to create a lasting habit in users’ lives.

While the feeling of potentially missing something may get users to check the app more often at first, Clubhouse risks losing the habit. The app must ensure there are always enough interesting conversations happening around the clock. If the user can’t depend on the app to entertain them at any time, all the time, they’ll find another service that will. Building both sides of a synchronous content platform isn’t easy and it’s no coincidence that the major social networks have struggled with their livestreaming services (e.g. Facebook Live).

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The top social media platforms US adults use - Insider Intelligence Trends, Forecasts & Statistics

Facebook remains atop the social ladder

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Spotify buys Locker Room to become a Clubhouse competitor - Protocol — The people, power and politics of tech

It has been clear to Spotify for a while now that if it wanted to be the destination for all things audio, it was going to have to beat Clubhouse at its own live-audio game. To do that, the company just announced it is acquiring a company called Betty Labs, which makes an app called Locker Room — it operates like Clubhouse, but with a particular focus on sports fans.

Locker Room was born out of an app called Betty, which founder Howard Akumiah created as a way to make live sports predictions with his friends. Betty got a little too close to sports gambling for his tastes, and Akumiah realized the most fun part of the product was the live chat that was happening during games. People were coming to Betty when the game was on, because they knew there would be someone in the app talking about it. “The real impetus for Locker Room as we know it today is actually sports talk radio,” Akumiah said.

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LinkedIn Also Has a Clubhouse Rival in the Works Now

The latest platform dipping its toes into the tepid waters of the “social audio experience” is LinkedIn, which confirmed on Tuesday that it’s developing an audio networking integration for its app that will rival the existing voice-only chat app Clubhouse.

Clubhouse itself has inspired a host of copycats since its initial rollout in March 2020, with Twitter Spaces currently in beta testing and Facebook, Telegram and Discord all confirming that they have their own audio-networking features in the works. But LinkedIn claims that its own answer to Clubhouse was born less out of a desire to keep up with the Joneses and more as an answer to its own users’ needs:

“We’re seeing nearly 50% growth in conversations on LinkedIn reflected in stories, video shares, and posts on the platform,” a LinkedIn spokesperson told TechCrunch. “We’re doing some early tests to create a unique audio experience connected to your professional identity. And, we’re looking at how we can bring audio to other parts of LinkedIn such as events and groups, to give our members even more ways to connect to their community.”

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Automating Writing?

OpenAI’s text-generating system GPT-3 is now spewing out 4.5 billion words a day - The Verge

One of the biggest trends in machine learning right now is text generation. AI systems learn by absorbing billions of words scraped from the internet and generate text in response to a variety of prompts. It sounds simple, but these machines can be put to a wide array of tasks — from creating fiction, to writing bad code, to letting you chat with historical figures.

The best-known AI text-generator is OpenAI’s GPT-3, which the company recently announced is now being used in more than 300 different apps, by “tens of thousands” of developers, and producing 4.5 billion words per day. That’s a lot of robot verbiage. This may be an arbitrary milestone for OpenAI to celebrate, but it’s also a useful indicator of the growing scale, impact, and commercial potential of AI text generation.

OpenAI started life as a nonprofit, but for the last few years, it has been trying to make money with GPT-3 as its first salable product. The company has an exclusivity deal with Microsoft which gives the tech giant unique access to the program’s underlying code, but any firm can apply for access to GPT-3’s general API and build services on top of it.

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Facebook, the Algorithm and You

You and the Algorithm: It Takes Two to Tango | by Nick Clegg | Mar, 2021 | Medium

In a recent article for The Atlantic, Adrienne LaFrance compared Facebook to a Doomsday Machine: “a device built with the sole purpose of destroying all human life.” In the Netflix documentary The Social Dilemma, the filmmakers imagine a digital control room where engineers press buttons and turn dials to manipulate a teenage boy through his smartphone. In her book Surveillance Capitalism, the Harvard social psychologist Shoshana Zuboff paints a picture of a world in which tech companies have constructed a massive system of surveillance that allows them to manipulate people’s attitudes, opinions and desires.

In each of these dystopian depictions, people are portrayed as powerless victims, robbed of their free will. Humans have become the playthings of manipulative algorithmic systems. But is this really true? Have the machines really taken over?

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Nick Clegg tries to reset the conversation - Platformer

The United States has changed profoundly in the weeks since Donald Trump was dislodged from office and Joe Biden assumed the role. The rate of vaccinations keeps accelerating, a national recovery act has passed, and a press corps suddenly bereft of scandal has found itself covering the droppings of the First Dogs.

In at least one respect, though, not much has changed as all: the last administration didn’t like Facebook, and the current one really doesn’t either.

Broad bipartisan disdain for Facebook has been a theme in the five Congressional hearings involving the company since last summer. It has manifested itself in multiple ongoing antitrust lawsuits, privacy inquiries, and other skirmishes around the world. (India is currently suing the company to prevent WhatsApp from changing its terms of service, to name just one example.)

Meanwhile, the idea that Facebook’s design rewards polarization and is fraying democracy is now firmly embedded in pop culture: The Social Dilemma, while a terrible movie, also seems to have been a bona fide hit for Netflix.

It’s in this context that I spoke to Nick Clegg. Today Clegg, who joined Facebook as its head of global affairs in October 2018, published “You and the Algorithm: It Takes Two to Tango,” a 5,000-word blog post that sets out to reset the conversation about Facebook on terms more favorable to the company.

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Governments Hate Encryption

UK may force Facebook services to allow backdoor police access | Facebook | The Guardian

Ministers are considering forcing Facebook to implement a backdoor to allow security agencies and police to read the contents of messages sent across its Messenger, WhatsApp and Instagram chat services.

Industry sources say they understand that the Home Office is threatening to use a special legal power called a technical capability notice to compel Facebook to develop a system to allow for the eavesdropping of messages.

The Open Rights Group, a privacy watchdog, said it feared that demanding backdoor access would mean “subjecting all our private messages to monitoring and surveillance on the assumption that we are all criminals”.

Jim Killock, its executive director, called on Boris Johnson to “stay true to his libertarian instincts” and “resist the Orwellian and frankly dangerous impulses of the Home Office and some of his colleagues to snoop on our private messages”.

The Home Office argues that Facebook products can be exploited by paedophiles, and is using concerns about child safety to pile pressure on the US company as it tries to upgrade the security of all its services – in particular by extending end-to-end encryption to its Messenger app.

Although the Home Office said it would not comment on whether it would hit Facebook with a technical capability notice, citing reasons of national security, a spokesperson reiterated the government’s concerns.

“End-to-end encryption poses an unacceptable risk to user safety and society. It would prevent any access to messaging content and severely erode tech companies’ ability to tackle the most serious illegal content on their own platforms, including child abuse and terrorism,” they said.

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SPACs Under Pressure

E28: Current state of public & private markets, Archegos debacle, US debt issues, wealth tax & more

Substack Rising

Substack confirms $65M raise, promises to ‘rapidly’ expand its financial backing of newly independent writers – TechCrunch

This afternoon Substack, a paid-newsletter startup, confirmed that it has raised $65 million, as initially reported by Axios. TechCrunch dug into the math behind the financing here. As anticipated, a16z led the new financing.

What’s in store from the now Series B-backed company? Product work. The company wrote that it intends to “rapidly” expand its Substack Pro program, which pays writers for a year to assist them in launching their own mini publication; Substack takes a larger cut of Pro user earnings during their first year, reverting to its usual split the next.

The Substack Pro model has attracted controversy in recent days, with some writers — both on Substack and not — criticizing the startup for opacity in whom it pays via its Pro program; some have argued that Substack is subsidizing anti-trans writers in particular.

The company is motoring ahead on building out its infrastructure regardless, stating in its note that it intends to spend some of its new capital on creating “increasingly powerful subscription-publishing tools,” and “a support infrastructure for independent writers.” More tooling and more assistance could prove key to enticing more writers from their current employers — or Substack rivals — to its platform.

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Investing in writers - Substack Blog

When we started Substack to build an alternative media economy that unlocks the full potential of the internet and gives more power to writers and readers, we didn’t know if the model would work. A lot of people told us that no one would pay for newsletters. Others didn’t think there was any “scalable” financial future for writing or the news media.

That was in 2017. Now, it’s clear that the Substack model, based on subscriptions instead of advertising, is working. Writers are gaining the independence they need to do their best work. Readers are finding writing that has been crafted for them and not for an economy based on engagement-based algorithms. A wild array of new voices is emerging to produce work you can’t find anywhere else.

Over the last three years, readers have paid writers tens of millions of dollars through Substack. More than half a million people pay to subscribe to a publication on the platform. The top 10 publishers are grossing more than $15 million a year.

Six months ago, as a demonstration of our confidence in the model, we started a financial program to help writers launch their own businesses on Substack – and it’s working so well that we are going to expand it rapidly. In fact, the viability of the Substack model has become so clear that Facebook and Twitter are now chasing us.

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Job of the Week

We are hiring a Product Partner. If you know Connect, you know that… | by Connect Ventures | Apr, 2021 | Medium

If you know Connect, you know that Product is is at the centre of everything we do.

Our mission: to back the best product-led software companies at seed stage, and the ambitious founders who build them.
Our investment thesis: To invest in opinionated products, crafted with love and loved by many.
The companies we have backed
The founders we have partnered with: Visionary product thinkers, opinionated product leaders, and often expert operators themselves in Product roles like Design, Engineering, and Product Management.

Since we co-founded Connect, we have been building a venture capital firm with a singular conviction and expertise in backing product companies. We call our craft product-first investing. We work every day to perfect it. We strive to have the same depth of expertise in Product that we have in Business and Strategy. Ultimately, we want to stay true to our promise that Connect is the VC Where Product Founder Fit.

With these goals in mind, we want to complement our team with a Product Partner. We are recruiting a software product enthusiast, with relevant experience in designing, building and scaling software products. We have high ambitions for this role. Simply put, we expect our Product Partner to enable us to further leverage product as the True North of the firm.

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Startup of the Week

Pipe, which aims to be the ‘Nasdaq for revenue,’ raises more money at a $2B valuation – TechCrunch

Fast-growing fintech Pipe has raised another round of funding at a $2 billion valuation, just weeks after raising $50 million in growth funding, according to sources familiar with the deal.

Although the round is still ongoing, Pipe has reportedly raised $150 million in a “massively oversubscribed” round led by Baltimore, Maryland-based Greenspring Associates. While the company has signed a term sheet, more money could still come in, according to the source. Both new and existing investors have participated in the fundraise.

The increase in valuation is “a significant step up” from the company’s last raise. Pipe — which only launched its platform last June — has declined to comment on the deal.

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