This is coming more than a year after Bloomberg reported that the social audio app has laid off multiple employees as part of its broader restructuring...
Popular social audio app, Clubhouse has announced its decision to lay off more than half of its employees. This decision was made public in an official blog post addressed to Clubhouse employees by founders, Paul Davison and Rohan Seth.
This is coming more than a year after Bloomberg reported that the social audio app has laid off multiple employees as part of its broader restructuring and a rethinking of the audio app’s strategy.
The social app, which was originally valued at $4 billion by investors like Andreessen Horowitz, Tiger Global, and Elad Gil, and was backed by more than $100 million in venture capital, adopted a different stance in the now common extensive layoff train.
While its founders said this new layoff was a difficult decision to make, the social audio platform is searching for change and product evolution, especially as its numbers have been declining in recent years.
In 2021, Clubhouse said that it saw a decrease of more than 60% from its high.
The announcement went as follows,
“Today we announced that we’re scaling back our org by over 50% and saying goodbye to many talented, dedicated teammates in the process. We’re deeply sorry to be doing this, and we would not be making this change if we didn’t feel it was absolutely necessary.”
Building for hard times
Clubhouse started in 2020, in the heat of the pandemic. The platform, which was created to be a medium for human connection via audio, more like live broadcasting, gained widespread adoption, particularly when the pandemic forced individuals, families, and friends to rely on digitization for constant communication.
It had over 10 million users in February 2021, but with post-COVID and the world opening up, people moved on to actual contact, making it more difficult for individuals to find their friends on Clubhouse and fit extended discussions into their everyday routines.
The founders claim that the team struggled to carry on with their current team size after the drop, but that was ineffective in part because it is challenging to share the strategy with cross-functional teams as well as the cons of working remotely.
Unlike other business owners and tech companies, these co-founders did not mention the economy when they announced the layoffs. Instead, Clubhouse appears to be addressing the challenges that come with running a business internally and creating something that customers want externally due to overhiring and a remote work environment.
Speaking on the hard decision made, the founders in the blog post said,
In order to fix this we need to reset the company, eliminate roles and take it down to a smaller, product-focused team. We arrived at this conclusion reluctantly, as we have years of runway remaining and do not feel immediate pressure to reduce costs. But we believe that a smaller team will give us focus and speed, and help us launch the next evolution of the product.
Support for the impacted employees
According to the announcement, the company has put together a bouquet of support items for the affected employees. These include:
- Severance pay: Impacted employees will get severance packages including salaries for the rest of April, plus 4 months of additional severance for all departing employees.
- Equity acceleration: Acceleration programs will be put in place for impacted employees till their vesting period which is August 2023.
- Healthcare: Clubhouse will pay for COBRA through Aug 31, 2023, for impacted employees, providing full healthcare coverage till the end of the period.
- Work equipment: Impacted employees will be allowed to keep their company-issued laptops, to help them research and apply for new roles.
- Career support: Career support programs are included in the severance package, which includes referrals, references, and support.
- Immigration support: Clubhouse will be providing support for those who are on visas.
Clubhouse 2.0
According to the company, the remaining employees will be on a quest to develop a new iteration of the Clubhouse, which was previously adored and gained enormous traction in the social sphere, as part of the restructuring and resetting.
Speaking of the future plans despite this layoff, Clubhouse founders said in the blog post,
We have a clear vision for what Clubhouse 2.0 looks like and we believe that with a smaller, leaner team we will be able to iterate faster on the details, build the right product and honor our teammates who helped us get here.