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Clubhouse is laying off employees and ‘resetting’ the company

The once hyped startup is "scaling back our org by over 50%."

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Clubhouse, the once hyped audio app that took off during the height of the pandemic, is laying off staff as part of a company “reset,” the startup announced. In a letter to staff shared by the company, founders Paul Davison and Rohan Seth said they were “scaling back our org by over 50% and saying goodbye to many talented, dedicated teammates.”

Interestingly, Davison and Seth said that the company, which was reportedly valued at $4 billion in 2021, was still well-funded, with “years of runway remaining.” They added that they “do not feel immediate pressure to reduce costs.”

Clubhouse exploded in popularity early in 2021 at a time when many people were feeling socially isolated due to the pandemic. The app was able to draw in big names like Elon Musk and Oprah for its live audio chats, which helped further fuel its early success. But Davison would later acknowledge that growth came “way too fast,” and usage dropped off amid competitors cloning the service and more people returning to their normal activities as the pandemic eased.

In their letter to staff, Davison and Seth alluded to these issues. “But as the world has opened up post-Covid, it’s become harder for many people to find their friends on Clubhouse and to fit long conversations into their daily lives,” they wrote. “To find its role in the world, the product needs to evolve. In order to fix this we need to reset the company, eliminate roles and take it down to a smaller, product-focused team.”

The founders went on to say that they will be focusing on “Clubhouse 2.0,” though they didn’t elaborate on what the service may look like going forward, just that it would be built by a “smaller team.”

Clubhouse isn’t the only live audio service to struggle. Spotify recently shut down its standalone live audio app, Greenroom. And Reddit closed its take on live audio, Reddit Talk, in March. Even Amazon and Meta have struggled to keep some of their audio projects going.