Clubhouse Media wants to get over the confusion of the Clubhouse application

It was a phrase uttered countless times during Zoom meetings. But this time, he accidentally sent an unknown stock to new heights: “Can you hear me?”

Elon Musk was making his debut on Clubhouse, the only audio application that has exploded in popularity in recent months, in part due to Musk’s participation in that room on the last day of January. In a few seconds, the room reached its capacity of 5,000 people. The overflow rooms crowded to listen to the CEO of Tesla and SpaceX. In the words of the room’s host, Sriram Krishnan, “You kind of broke into the Clubhouse.”

No one knew, Musk’s participation would also trigger a massive interest in a completely independent company: the publicly listed marketing and influence company Clubhouse Media Group, which is not affiliated with the private audio application, supported by Andreessen Horowitz, which lasts approximately one year. old.

At the end of the interview, Musk called the experience “wonderful” and said he didn’t even know about the application a week before. It sparked interest in the burning Clubhouse. Google’s search for “Clubhouse stock” peaked on February 1, the day after Musk spoke. But instead of buying shares of the app, retailers found the marketing and media firm for influencers who run several mansions of influencers. That didn’t stop many of them, who either bought it because of the confusion or wanted to play it safe.

The shares of Clubhouse Media, which is best known for running content creators, have already grown so far, growing in the general interest of applications. Since the close on Monday, the stock has risen 472% so far, trading at $ 13.90 a piece, reaching its market capitalization at $ 1.3 billion. At the highest level, the stock traded at $ 28.43 per share on February 16th. Compare it to its $ 2.50 price on November 12, when the company completed its reverse merger to go public.

From healthcare to influencer management

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

The mansions of the creators usually host a handful of influencers at all times, serving as a partial agency and a partially elaborate set, so that they can create continuous, money-generating content with an opulent background. Instead of paying rent or taxes for things like housekeeping, creators often offer promotional content to advertisers or the house itself.

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

Young said Clubhouse Media works with creators on traditional branded offers, taking a 20% fee. It also creates intellectual property that it could license and monetize. So, for example, creators would create YouTube videos. In one case, Young said one of their homes is making enough AdSense revenue from Google to pay the rent.

The company also has a kind of risk incubator.

“The idea was either to acquire or to set up companies or to own equity in companies, which we could then use our marketing arm, which was available to us influencers to go and push the top traffic of the funnel, ”he said. So far, the company has hired only a handful of projects, including nearly $ 400,000, to host member Lindsay Brewer’s racing career.

The company also realizes how to offer shares to its creators. Currently, one creator has shares in Clubhouse Media, while several are included, Young said.

The company’s journey to the market was a bit unusual, especially since it was the first content house to do so. Instead of finalizing an IPO or SPAC, it became public through a reverse merger. The already public group Tongji Healthcare Group acquired the company in November, and the influencer management company remained under control.

At the same time, the company requested a change of name to Clubhouse Media Group. He also changed his ticker symbol to “CMGR” in “TONJ”. This change did not pass until January 20, when the confusion about the company was about to be.

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

“It’s a little frustrating”

The timing was particularly weak, as the Clubhouse social app opened up to a wider audience, expanding from its close-knit group of Silicon Valley investors and celebrities such as Oprah Winfrey and Jared Leto. As of March 14, it has been downloaded 12.7 million times, according to mobile data and analytics firm App Annie.

“It’s a little frustrating,” Young told CNBC in a video call earlier this month. “It’s a weird situation this year, because we were so used to being a Clubhouse last year and no one knew about the Clubhouse app. This year it kind of turned everyone into talking about the Clubhouse app and there’s confusion.”

“Obviously, we tried our best to avoid confusion. We issued 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 the pandemic.

“I think we were the first public activists on the internet everywhere with a lot of press and, honestly, I don’t know where the Clubhouse application will go,” he said. “There will be a lot of competition in space, another 30 competitors will appear in the audio space, they could survive, maybe not.”

App spokespersons and Andreessen Horowitz did not respond to requests for comment on the confusion.

What’s next for Clubhouse Media

Designers’ homes are not a new concept, as the New York Times reported in January last year, although it seems that a new generation is rapidly emerging in tandem with the rise of TikTok.

However, 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 flows from operating activities of $ 1,955,239 and $ 30,488, respectively.

“There are substantial doubts about Clubhouse Media’s ability to continue as ongoing concerns due to their recurring historical losses and negative cash flows from operations, as well as their reliance on private capital and financing,” the company said in a statement. press release dated March 15, 10. -Winning K. The company expects to continue to report losses and negative cash flow for the foreseeable future, it added.

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

Most recently, Clubhouse Media purchased “The Tinder Blog,” a popular meme page with 4.2 million Instagram followers, for an undisclosed amount. In a press release announcing the business, the company said that aggregation accounts, such as the blog, “do very sustainable and scalable business that complements our mission and portfolio.”

Clubhouse Media may also begin expanding its coverage of content houses, saying in a recording this month that it plans to add two to four houses each year. Young said the company is currently looking at Miami; Austin, Texas; Scottsdale, Arizona; and Nashville, Tennessee, although nothing is set in stone. You could also venture internationally to Dubai and Bali. The company now operates a total of five homes in California, Las Vegas and Europe, ranging from resident to resident.

Finally, Young said he wants to get over the confusion and set up Clubhouse Media as his own successful company.

“It is important to know that we are a business that works, that we have been in operation for a year and that we have high aspirations and I think a platform to be truly one of the few publicly traded companies that invests in a diverse portfolio in the social space. media, “he said.

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