Did Clubhouse achieve their $1Bn valuation by exploiting or empowering black people?


Clubhouse has recently announced a whopping $1bn valuation, in turn becoming a unicorn, following in the footsteps of the exponential growth of technology platforms such as FB, YouTube, Spotify and Instagram. Is CH different? Yes, voice is the future; the future of interfaces will be zero/little interface and voice first. CH is basically a hybrid between Yahoo chatrooms and amateur CB radio from decades ago. The demand has always been there for this, it’s the way they’re doing it that is new.

The Power, Reach and Influence of the Black Community

The rapid growth and rapid acceleration of these new platforms over the past decade has made transparent the quantitative and qualitative data which confirms what the black community have always known to be the case, Black people are a prerequisite of success for big business: the black community yield huge power, influence and reach which not only contributes to, but is the “secret sauce” of, the rocket fuel which creates locally, nationally and globally known brands, be it in fashion, music, movies, social media and pretty much all types of businesses and brands.

It’s easy to be one dimensional and say “Oh but there are plenty non-black tastemakers and influencers. This is indeed the case: influential people come in all races, nationalities and types, but if we are being honest, many of these influencers have been inspired by and leverage black culture.

Big business has for a long-time known this was the case, they never underestimated the power of Black culture, but undoubtedly they consistently exploited it, retaining most financial benefit, which in effect treated the black community as a supplier rather than a genuine valued and symbiotic partner. One only has to look at the volume of people who financially benefited most in industries like music, nearly always the art, culture or genre was monetised by and benefited non-black people the most, whether it was done officially like Jordan with Nike, or the influence that Dapper Dan had unofficially on the growth of Louis Vuitton and Gucci or the impact Dipset (Cam’ron, Juelz Santana, Jim Jones etc) had for Supreme.

The machiavellian exploitation of Black culture

One could make the argument that music execs like Rick Rubin and Lyor Cohen in Hip Hop and Chris Blackwell in Reggae were culture vultures, preying on artists who didn’t have their business savvy with predatory deals like the infamous 360 deals, to the point where they could dictate the creative direction and content of the music. On the flip side, the labels they created such as DefJam, Island etc gave birth to some of the most amazing, timeless and iconic music and artists who have gone on to build their own empires. Business isn’t charity; in reality, it is cutthroat, dog eat dog and those who own the successful companies have their own pressures, risks and battles.

So have things changed in music? Well yes and no. As information has become more readily available we have seen artists really take ownership of their own brand. New technologies and revenue channels have helped enable that, and we have even seen black artists become execs, in turn becoming extremely wealthy and reportedly billionaires, such as Jay Z, Diddy and Dr Dre. However, as they climb the ladder, are they at the top of the food chain and the most powerful stakeholders? No. Jay Z is listed in 41st place of the Billboard Power 100

Yes, these lists are fluffy and very subjective and not always a true reflection of talent, power, influence or impact, just like lb for lb lists in boxing, but what is very shocking is there are very few black people in the top 50. However, what is great to see is there has been a rapid growth in Black people featured in the second half of the list, with very inspiring stories such as Dre London who left the UK with a dream and became Post Malone’s manager and is now arguably one of the most powerful artist managers in the world. The list shows that it is possible for all to reach a level, but to be firmly in the top 10 there is much work to be done, especially given the dual monopoly Spotify and Apple have created in the music industry.

Does tech use the music industries playbook of the exploitation of black culture?

The big question is are Clubhouse intentionally exploiting black people or are they empowering them?

Well, to answer that question, first we need to look at what the company is. Like any tech startup, Clubhouse started with very little resources.

Paul Davison founder of Clubhouse

One of the founders of Clubhouse, Paul Davison has been working on social platforms for over a decade, he knew they needed to demonstrate exponential growth in order to reach milestones large enough to compel investors to fund the company to get to the next milestone because with the strength of FB, investors get really nervous about the business case of social media. They fear FB or Google will simply replicate.

How did Clubhouse get going?

Startups can easily focus on 30-40 products but if they do that they will stretch themselves too thin and burn out. To move forwards they must narrow their focus and focus on only a few things which they can do well with. It is obvious Clubhouse have done that, they’re only IOS and have targeted demographics in a clever and staged way.

Many people don’t know but in the very early days of Clubhouse they only provided invites to Silicon Valley tech investors, this was a very astute move. Whilst all of these investors for sure have their finger on the pulse of new and emerging trends, eyes glued to laptops, phones and spreadsheets tracking investment opportunities in new and exciting companies, but they mostly aren’t themselves the epitome of cool or trendsetting. They tend to follow trends which results in a stereotypical tech investor uniform of Business Shirts, Jeans, Patagonia Gilet Vests and Hypebeast sneakers they purchased on StockX for over the odds….. they’re a 12-year-old Supreme resellers dream, but they are also a tech startup founder’s dream. Startups need investment. Clubhouse was machiavellian in not only laser focussing on and targeting the investor community, but by also creating FOMO within it; to get an invite they did what every hot startup does, they started small, but created a community, virility and awareness. Best of all, that community writes cheques. It was very, very smart.

This reminds me of what food tech startup Deliveroo did when they first launched. Founder Will Shu initially launched the company in only two boroughs of London: Kensington and Chelsea and Westminster. Why? Well, these are two of the richest parts of London, tons of wealthy people, with disposable income and tons of restaurants, they were able to not only prove their model and unit economics, but this was also Machiavellian and smart, investors (many of whom lived in those areas) were literally fighting to get involved and invest, although those who did had a rude awakening when they realised the model didn’t work so seamlessly in cities like Birmingham where average order values are much lower and those with most disposable income are spread out as far as Solihull and Sutton Coldfield. But Deliveroo had the resource with investment to overcome that and to their credit, they have done a great job. Interestingly, they also leveraged black celebrities like Stormzy in their early days.

Playing with the big boys with big cheques!

Back to Clubhouse. With the eyeballs and voices of the investor community firmly on them and virility and FOMO building, Clubhouse closed Series A investment from Andreessen Horowitz and Kortschak Investments mid last year. These are not just any investors, both have had multiple investments in multibillion-dollar technology companies. Their numbers and track record do the talking, they are Tier 1 and were a big win for Clubhouse, they not only provided money they also came armed with a wealth of expertise, deep experience and powerful networks, but we will come back to them and that shortly.

So with investment, what next, well they needed to grow, with that comes a variety of challenges as when a tech platform grows as it puts pressure on the underlying technology and infrastructure, more users, more problems, more costs, so it is essential to have a very clear strategy and grow users in stages, behind the scenes I am certain they were frantically trying to improve the stability of the platform and be sure they were ready for exponential user growth, as we have seen with Signal, if that comes too fast, it can take down the platform and damage the reputation. I have seen that myself first hand, as far back as when I was building JUST EAT in our early days, events such as Valentine’s Day or even rainy weather would really push our platform to the absolute maximum.

Strong foundations, well – what next?

Clubhouse clearly was confident they were ready to take it to the next level, over the past 6 months I have seen crossover from tech and investor communities talking about Clubhouse and it has been obvious the fastest growing community is influential black people. Now was I surprised by this, no? I expected it, given the a16z investment. They understand the black community and culture more than anyone, cofounder Ben Horowitz and his wife Felicia are friends with some of the most famous black celebrities such as (my favourite rapper) Nas, Oprah and MC Hammer. Few VC’s understand black culture to that level, but a16z are literally key stakeholders in it and bridge between it and tech, creating a role for themselves as “the” gatekeeper to black culture. ex Employee and Cambridge educated intellectual/wiz-kid Benedict Evans famously framed it best “A16Z is a media company that monetizes through VC.” or in layman’s terms they get access to and fuel the best investments by the power of their ability to go direct to literally influence popular culture.

The a16z affect

There are mechanics behind this that enables a16z to do what they do, they have a huge team of with the technical and finance bods you would expect to see in a VC fund, but many are marketeers, I think the best of which also are super connected, cultural influencers, the most powerful of the bunch are the holy trinity of Ben Horowitz, Chris Lyons and Nait Jones, they are able to connect the dots between black culture, music, sport and celebrity and instantly bring priceless credibility, endorsements and reach almost overnight. If you were to work out the market dollars that it would cost to replicate this, I think the likes of WPP or Publicis would literally kill someone in broad daylight for the contract.

So have Clubhouse leveraged this, absolutely. Many of the celebrities and tastemakers are clearly a result of a16z’s involvement, their friends aside, what’s in it for celebrities, well I think that’s obvious, in the old day’s Rappers wanted to be athletes and athletes wanted to be rappers, so there was a match made in heaven, today Black celebrities want to be VC’s they want access to deal flow, and to learn from the likes of Ben Horowitz and Marc Andreessen, even Ben’s friend Nas has said publicly that much of the knowledge and inspiration for his own successful VC investment fund Queensbridge Venture Partners has come from Ben. I also think Clubhouse is an amazing platform for all Celebrities and people in the public eye of all levels, to show a new dynamic to themselves, humanise and show their authentic personality, which of course could go either way but done well could do just as much for them as a stint on TV shows like I’m a celebrity or Big Brother. We have seen people even build their careers from their personality alone such as Cardi B, who then was able to use that to build her other talents such as music, a16z get that and there’s no question they are empowering black people, have black people as partners in their funds and do great things to create change in an industry which if you look at the data doesn’t invest in black people to the degree it should.

a16z and Clubhouse – a match made in heaven?

I asked a partner at a top tier VC in Silicon Valley could Clubhouse have leveraged the black community without a16z, (he agreed to talk openly, but wanted to remain anonymous).

“It’s a good question, I don’t believe CH would have grown as quickly without the celebrity and so many of the celebrities that joined were black. A lot of that is the work of a16z and the folks there. it was deliberate for sure, but it made it a better place and they will figure out monetisation and the black community on CH should benefit (I hope)”

I then asked him does he feel that a16z are a force for good for the black community he said;

“Ben brought in a to of the black younger talent, I think without him, there would be no Chris or Nait and it shows what is possible by bringing black people in as equal partners”

My take: I have long admired Ben and what he has built with a16z; it’s very smart, they are amazing at what they do and execute brilliantly, so much so that most of their peers don’t even “get” how they do it. They are brilliant for Clubhouse.

Clubhouse – here to empower or exploit?

So on the face of it, Clubhouse has great investors, they have a platform which is giving black people a voice and platform to tackle important topics and network wider.

But that view isn’t shared by all black people, many feel that Clubhouse is not only another brand who want to piggyback on black culture but one which is literally growing by exploiting black trauma.

But some see it that Clubhouse provides space for therapy

As I looked through more experiences of CH, I came across various instances of borderline bullying taking place in rooms. For example, one topic was experiences of an MUA, which by all accounts turned pretty toxic and somewhat abusive.

How could this end in tears for the black community?

This really got me thinking, could a platform like Clubhouse in real-time enable trauma and what will the long term negatives be for the black community and generally anyone who shares their experiences of trauma or struggle.

The more I looked at stories and experiences of CH, I saw that topics such as “Prison Experiences” could be potentially dangerous given that this data can be recorded directly or indirectly outside the platform and with the rise of sinister databases, in theory, a person who had done a crime, served their time and record was spent, could have their data scraped Cambridge Analytica style into some data miner, and maybe in the future be wrongfully penalised, So maybe these data points being widely available could further create discrimination in unexpected ways.

I asked Mac Conwell aka Mac the VC who is founder of Rarebreed a pre-seed VC investment fund his thoughts on brands exploiting black people…

He said “But that’s as American as American Pie. A significant portion of Twitter content comes from Black People. I mean when you’re travelling the globe you see the influence of western cultures, but when you take a step back to observe what western culture is, it’s hip hop culture, which is black culture. This is what it means to be a community of influence with no money or power. You are powerless to stop the exploitation. You just continue to share your pain through creative ways”

How can black people navigate and leverage Clubhouse?

Of course, any platform can have pros and cons and can even be dangerous or as it grows to become very different.

Sherelle Dorsey is the Founder of The Plug which is a community for news, insights and analysis in Black innovation. She told me “We all need to see these tools as tools, To leverage them to draw attention to our brands and to monetise outside of the platform, and also continue to create our own safe spaces”

Sherelle has a great point, there needs to be meaningful upside and benefit, this was a view echoed by Harry Alford Co-Founder of Humble Ventures which drives innovation by partnering with Startups, enterprise and investors, he said “Black and Brown communities are the highest consumers of technology, additionally we represent the fastest-growing segment of entrepreneurs. The success of Clubhouse, much like Twitter, has largely been driven by Black culture. There comes a point where we must ask ourselves “but what are we getting in return”

Treat your contribution as you are a business and stay on brand!

We have seen over the past couple of years that if people don’t be considerate to others, they can be de-platformed e.g conspiracy theorist Alex Jones from InfoWars, Grime Godfather Wiley and the bitter, toxic troll Katie Hopkins. We can get into debates around the speed, balance or the fairness of those who are de-platformed and also there are others who perhaps should be, but one thing is for sure, the standard of what is and what isn’t acceptable to say online is creating more need to exercise decorum and respect others.

Shauni Caballero, Founder of the Go 2 Agency is not a household name, but she is one of the most influential and respected women in the UK music scene, she works closely with many artist’s and there are many who would have missed out on substantial earnings if wasn’t for her knowledge of channels like PRS and also how to navigate the business side of the music industry. Shauni is a big user of CH, I asked her for her take on Clubhouse;

“Black people using Clubhouse should treat their presence and contribution like a business, they should be very careful and tread carefully as at times it can be problematic on there. There are people who don’t care if they cause controversy on there, many try to be because they know those topics will grab attention, but I feel that all attention isn’t all good attention. You need to play it long, make sure you stay on brand, avoiding the toxic or negative aspects, especially if you want to monetize your contribution because if you are problematic brands aren’t going to want to go anywhere near you”

I agree with Shauni, it’s very easy to be sucked into negativity and we need to make a conscious effort to avoid it and also reflect as the world and our views change, I think if we are all being honest we all have grown up a certain way, had experiences and developed beliefs which means we will be triggered, but we should try to be conscious as this works both ways and treat others respectfully.

Shauni said she has seen various people, especially people working in the music industry who use CH well and she highlighted Nathan Hector who had created talent rooms with 10k Followers and also Bouncer from PlayDirty records who she felt was doing a great job in the way he had hosted rooms and his overall contribution. She continued “You need to think about the quality of the content you are putting out, the people who monetize Clubhouse the best will be the ones with Quality content all the toxic stuff and gossipy stuff will be short-lived and not monetize well or at all”.

Shauni added “There are people who will ruin their brand because of how they have conducted themselves, but there are others like 21 Savage, I never knew he had such a great personality, he is absolutely hilarious and others like J Prince Jr where his contribution humanises him. People screen record as they do with Instagram live and that may be one piece of the conversation that doesn’t give a context of the full conversation, and further down the line it may not accurately reflect the person, just like a few bad tweets from 9 years ago doesn’t reflect who you are today”

I asked Shauni what her own personal experience is as a CH user, she said.

“I am someone who is very productive on the app, but since it has got very gossipy and toxic, I’ve stayed out of it, but every now and again I’ll dip in and I’ll find a brilliant room like one by Bryan-Michael Cox who is a brilliant songwriter hosted a room once and he and a few others were talking about the story of songs and played these iconic songs and all the songwriters who wrote the songs were actually in the room and were able to tell the story of how they wrote the song and how that song came to be, it was incredible I literally didn’t sleep, also the dreamgirls auditions were brilliant, as was when Lion king premiered on there, it just goes to show that those rooms still hit capacity but often slowly, on the overhand the gossip rooms hit capacity far quicker but for the most part, it never ends well for the moderators. Bryan-Michael Cox etc show you can still do major numbers with good quality, it’s more sticky and will have more longevity”

Conclusion: Empower or exploiting

There is an argument for both, it’s clear that for those who use CH well, there is leverage to be had. I don’t feel that it’s fact that Clubhouse is intentionally setting out to exploit black people, but it’s very clear they’re intentionally leveraging the power of the black community, responsibility and duty of care to ensure that it is a safe place for all comes with that.

I would urge anyone from all communities who are giving their time, network and contributing to building a platform to think of their own value at all times!

What are the alternatives to Clubhouse, are there black-owned competitors?

The last point I’d make is that Swizz Beats and Timbaland have shown what the black community can create themselves, so it will be exciting to see new digital products emerge by black founders.

https://twitter.com/speirin/status/1353095980439253000?s=20There are several black-owned alternatives to Clubhouse, I spoke to the founder of one of those, Ayinde Alakoye who is Cofounder and CEO of n?dl (Pronounced Needle) he said “n?dl has been pioneering in this space since 2017, allowing content creators to transcribe their words as they speak to level the playing field for discovery. We’re excited that Clubhouse has brought helpful attention to our product. We think products made by people of colour tend to be more inclusive, but are overlooked by investors for those same reasons”

Links to the black-owned alternatives to Clubhouse

n?dl: Founder Ayinde
Fanbase: Founder Issac Hayes
The Cookout: Founder BG

I have enjoyed writing this article, I was very apprehensive of joining, I have a Huawei Android, so when I’ve received invites I wasn’t keen to go and get my phone out of a drawer, but I might just do that now as I’m curious.

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