Clubhouse Media wants to end the mess of the Clubhouse app

It was a phrase said over and over again during the era of Zoom meetings. But this time, he inadvertently sent an unknown action to new heights: “Can you hear me?”

Elon Musk was making his debut at the Clubhouse, the audio-only app that has exploded in popularity in recent months, in part because of Musk’s participation in that room on the last day of January. Within seconds, the room reached its capacity of 5,000 people. Overflow rooms filled to hear from the CEO of Tesla and SpaceX. In the words of the room host, Sriram Krishnan, “You practically broke the Clubhouse.”

Nobody knew that Musk’s participation would also generate great interest in a totally independent company: the publicly-held media and influence marketing company Clubhouse Media Group, which is not affiliated with Andreessen Horowitz’s private audio app that has about one year old.

At the end of the interview, Musk called the experience “incredible” and said he didn’t even know about the app a week earlier. This sparked interest in the burning Clubhouse. Google searches for “Clubhouse shares” peaked on February 1, the day after Musk’s lecture. But instead of buying shares in the app, retail traders were finding the marketing and media company for influencers who run multiple influencer mansions. This did not stop many of them, who either bought due to the mess or who wanted to play the mess.

The shares of Clubhouse Media, which is best known for managing houses of content creators, had already risen at this point, increasing the general interest in applications. At the close of Monday, the stock is up 472% accumulated in the year, trading at US $ 13.90 each, putting its market value at US $ 1.3 billion. At its peak, the shares traded at $ 28.43 per share on February 16. Compare to the $ 2.50 price on November 12, when the company completed its reverse merger to go public.

From health to influencer management

Clubhouse Media (formerly called West of Hudson) launched last March by CEO Amir Ben-Yohanan, attorney and company president Chris Young and Daisy Keech, a social media influencer with millions of followers who had just left another high-profile home profile. The company wanted to launch its own home, where Keech would bring some friends. (Keech has since moved on to focus on his own brands.)

Creator mansions often house a handful of influencers at any time, serving as part of an agency and part of an elaborate set, so they can make continuous, monetizable content with an opulent background. Instead of paying rent or fees for things like housework, creators often provide promotional content for advertisers or for the home itself.

Grouping a handful of influencers also helps them to promote and expand their reach. The company said in a January document that one of its influencers increased its Instagram followers from 3.22 million to 5.2 million in just four months, while its TikTok followers jumped from 3.4 million to 6.2 million.

Young said Clubhouse Media works with creators in traditional brand businesses, charging a 20% fee. They also create intellectual property that they can license and monetize. So, for example, creators would make videos on YouTube. In one case, Young said that one of his homes earns enough revenue from Google AdSense to pay the rent.

The company also has a kind of business incubator.

“The idea was to acquire or start companies or own shares in companies for which we could use our marketing arm, which was our reach of influencers to push traffic from the top of the funnel,” he said. So far, the company has committed to only a handful of ventures, including nearly $ 400,000 to house the racing career of member Lindsay Brewer.

The company is also figuring out how to offer shares to its creators. One creator currently owns shares in Clubhouse Media, while others are being integrated, Young said.

The company’s journey to the market was somewhat unusual, especially as it was the first content house to do so. Instead of completing an IPO or SPAC, it went public through a reverse merger. The already public Tongji Healthcare Group acquired the company in November, and the influence management company was left in control.

At the same time, the company asked to change its name to Clubhouse Media Group. He also changed his stock symbol to “CMGR” from “TONJ”. This change did not take place until January 20, when the confusion about which company was and was on the way.

“When we did the [reverse takeover] transaction, when we bought that shell, the idea was to always call it with the original name of our house, which was Clubhouse, “said Young, referring to the first home of the company’s creator in Beverly Hills.

‘It’s a little frustrating’

The timing was especially bad, as the Clubhouse social media app was opening up to a wider audience, expanding from its once cohesive group of Silicon Valley investors and celebrities like Oprah Winfrey and Jared Leto. On March 14, it was downloaded 12.7 million times, according to mobile data and analytics company App Annie.

“It’s a little frustrating,” Young told CNBC in a video call earlier this month. “It is a strange situation this year because we were so used to being the Clubhouse last year and no one knew about the Clubhouse app. This year everything has become everyone talking about the Clubhouse app and there is confusion.”

“Obviously, we try our best to avoid confusion. We made public statements, we want to make sure that shareholders are not confused: we have no affiliation with them. We are a different company,” he added.

Young said Clubhouse Media still has enough media value and presence to continue its Clubhouse name, despite the confusion. There is also the question of whether the application can survive after the pandemic.

“I believe we were the first publicly active on the Internet everywhere with a lot of press and, frankly, I don’t know where the Clubhouse app is going,” he said. “There will be a lot of competition in space, there are 30 other competitors in the audio space coming in, they may survive, or they may not.”

Spokesmen for the app and Andreessen Horowitz did not respond to requests for comment on the confusion.

What’s Next for Clubhouse Media

Creator houses are not a new concept, as the New York Times reported last January, although it appears that a new generation is rapidly emerging in conjunction with the rise of TikTok.

Still, Clubhouse Media will have to work to convince investors that supporting influencers is a viable business.

For the fiscal years ended December 31, 2020 and 2019, the company reported net losses of $ 2,565,409 and $ 74,764, respectively, and negative cash flow from operating activities of $ 1,955,239 and $ 30,488, respectively.

“There are substantial doubts as to Clubhouse Media’s ability to continue operating as a result of its historical recurring losses and negative cash flows from operations, as well as its reliance on private capital and financing,” said the company on March 15, 10 -K archiving. The company expects to continue to report losses and negative cash flow in the near future, he added.

Young said earlier this month that the company will spend the next year focusing on building a more robust and diverse revenue model. This could be anything from acquiring companies in the social media space to software companies, such as digital agencies that run branded businesses or software platforms that would allow influencers to create additional revenue.

Most recently, Clubhouse Media acquired “The Tinder Blog”, a popular meme page with 4.2 million followers on Instagram, for an undisclosed amount. In a press release announcing the deal, the company said aggregating accounts like the blog “contribute to highly sustainable and scalable businesses that complement our mission and portfolio”.

Clubhouse Media may also begin to expand its reach of content houses, stating in a document this month that it plans to add two to four houses a year. Young said the company is currently looking at Miami; Austin, Texas; Scottsdale, Arizona; and Nashville, Tennessee, although nothing is definitive. He could also venture internationally into Dubai and Bali. The company now operates five homes in total in California, Las Vegas and Europe, varying in residents.

Ultimately, Young said he wanted to overcome the confusion and establish Clubhouse Media as his own successful company.

“It is important to know that we are a company that is in operation, we have been in operation for a year and we have great aspirations and I think that a platform to really be one of the few publicly traded companies that invests in a diversified portfolio in the social media space” , he said.

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