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Clubhouse: Is the audio app really worth $4bn?

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Live-audio app Clubhouse is creating plenty of chatter – about itself.

Elon Musk, Oprah Winfrey, Kanye West, Demi Lovato and Mark Zuckerberg are among the celebrities to have popped up on the service. And you can find chats about everything from Bitcoin and Buddhism to relationships and R&B music on it.

Even so, the idea that this one-year-old app could be worth $4bn (£2.9bn) is startling.

It stems from a Bloomberg report saying the San Francisco-based start-up is seeking fresh funds at this level.

But it was only in January that venture capital fund Andreessen Horowitz bought a stake valuing the firm at a quarter of the sum.

The jump may be justified by a follow-up report that Twitter has discussed buying the app for the higher price – although it declined to confirm this when asked.

Tesla chief Elon Musk and the singer Demi Lovato have both appeared on Clubhouse in recent weeks

Why would Clubhouse be worth so much?

Clubhouse had about 13.4 million users in late March, according to research firm App Annie, having added about a fifth of that number over the previous four weeks alone.

In short, it’s growing quickly – despite being “invite only” and limited to Apple’s iOS – and appears to have found a gap in the market.

“It’s at the intersection of several hot trends – audio, live and social,” said Joseph Evans from Enders Analysis.

“And it’s recreating some of the things we can’t do normally because of the coronavirus pandemic restrictions, such as attending a talk or having a group conversation.”

At present the app doesn’t make any money. But that’s not necessarily important.

As Sarah Frier’s book No Filter recounts, Mark Zuckerberg insisted Instagram take its time before introducing ads after Facebook bought the photo app in 2012 for a then-groundbreaking $1bn.

The reason, he said, was that it was more important to establish “staying power” first.

But Instagram only achieved its value because both Facebook and Twitter wanted to buy the business.

And that’s unlikely to be the case this time round.

“A few years ago Facebook would probably have already put an offer on the table [for Clubhouse], said Mr Evans.

“But it’s not in the market for another social network because of the competition scrutiny that it’s under, so Facebook’s only option is to compete with it.”

Indeed, Facebook has just launched a new web-based app of its own called Hotline, which lets hosts chat to their audience via audio and text.

SourceBBC

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