Clubhouse will be bought out, probably pretty soon and I think the buyout is going to be Spotify.
Clubhouse has 600,000 monthly active users. Celebrity users including Drake, Ashton Kutcher, Jared Leto & Chris Rock. Launch in May 2020.
600,000 users on social isn’t a lot to brag about, but the platform has been invite only and compared to Google+ which launched in 2011 and failed, Clubhouse is maintaining much stronger user engagement times.
On top of that, average user age is 35 and it’s run a near perfect 50/50 in men to women, which is the most valuable demographic to get for advertisers.
Explaining Clubhouse
Basic pitch here is a social network where the focus is forming audio groups on certain topics and anyone can join in.
The best way to explain it is creating a very very easy audio podcast that anyone can setup, people can participate in and it’s very easy for people to find and join.
I’m not really into it, but a ton of friends of mine set them up and randomly get 500-1,000 people joining.
Why Spotify should buy it.
Spotify’s basic financials.
Current market cap-62 billion Revenue-7.6 billion in 2019/likely 8.5 billion for 2020 Growth-65% from 2017 to 2019 Profit-Negative 200 million, but was negative 1.2 billion in 2017. Showing a huge revenue gain in 2 years, but an 80% loss drop.
Comparing that...
Snapchat Market Cap-75 billion Revenue-1.2 billion in 2019/825 million in 2017 Growth-45% growth in those 2 years. Profit-Negative 1 billion dollars.
Snapchat is worth more than Spotify, but has had more stagnant user growth, higher debts, slower ability to reduce losses and way way less revenue.
This presents an idea that the market does have this interest in social media looking at Facebook’s growth/profit margins surpassing Microsoft & Apple’s and wants anything that attaches itself with it.
If Spotify purchased Clubhouse, they’d likely on day one have market cap grow 10% and that 6b-10b market cap growth would be for buying something that’d likely cost well under 500m.
What would Spotify do with Clubhouse though?
I’m not the biggest fan of the idea of companies buying themselves a new business model, but this actually makes a ton of sense.
Basic ideas for that.
- Higher performing clubhouse groups begin to stream on Spotify as podcast and saved there. Could be a TikTok effect where users do streams and randomly get 100,000 listeners via Spotify.
- Really easy way to source Spotify originals. Do well on Clubhouse and Spotify finds their exclusive podcasts there.
- Connecting clubhouse to Spotify to subscribe to people on Spotify while following on Clubhouse.
Big pitch for the relationship of Clubhouse & Spotify is the ability for Spotify to make Clubhouse the place people can go and build a podcast very easily.
Clubhouse could and should be what TikTok is for podcasts and longer form content, where people just can discover new podcast easily and build a following in a social and suggestive way with algorithms.
The only problem.
Only issue here is when Clubhouse first came out, they had 1,500 users and articles were coming out valuing the company at 100 million dollars.
Instagram had 30 million users when Facebook bought it for 1 billion dollars. Clubhouse is at 600k and growing at a slower pace, but one with an easier monetization path and higher ad value users.
The company would probably want something like 500 million dollars now, but it’s not likely worth that.
I think this is a good deal though and we’ll end up with either Spotify, Apple or Amazon buying it in the next 12 months.
And hey, I’m @Peralo on Clubhouse.
Maybe I’ll do an audio cast this week or something discussing this very post or something.
