Clubhouse needs to fix things, and today it cut more than half of staff

Clubhouse, a once skyrocketing social audio app built by Paul Davison and Rohan Seth, has laid off more than half of its staff. The startup’s co-founders made the decision in response to customer habits changing in a post-COVID world and remote work complexities, according to a blog post.

Those who were impacted will receive severance and continued healthcare coverage for the next few months. A spokesperson for Clubhouse declined to comment on the number of people impacted by today’s workforce reduction or the number of employees who remain at the company. Last October, Davison told TechCrunch that Clubhouse had close to 100 employees.

Layoffs come less than a year since the company last laid off a portion of staff as part of another restructuring. The company then told TechCrunch that “a few individuals have decided to pursue new opportunities and a handful of roles were eliminated as part of streamlining our team. We are continuing to recruit for roles in engineering, product and design.”

The social app, backed with more than $100 million in venture capital and once valued at $4 billion by investors, including Andreessen Horowitz, Tiger Global and Elad Gil, took a different tone in today’s larger layoff.

“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. To find its role in the world, the product needs to evolve,” the co-founders wrote in a blog post. They went on to write that the business has tried to change with its current team size but has been unable to due to the size of the team. “It’s difficult for us to communicate the strategy to cross-functional teams when it’s evolving by 1% each day, or to make quick changes when each surface is owned by a different product squad. Being remote has made this especially challenging for us.”

Unlike many entrepreneurs, the co-founders did not cite the economy when announcing the layoffs. Instead, Clubhouse seems to be responding to complexities that arise from overhiring and a remote work environment, both in running a business internally, and building something people want externally.

“Our belief is that as the world opens up, a couple things will happen: there will be more of an acute need to have a place where you can go and be among friends and meet their friends and have great conversations. I also think that an audio product is designed to be hands-free, designed so that you can multitask…I think the trends we’re building toward are permanent,” Davison shared onstage last year at TC Disrupt, offering a window into his product philosophy around social audio and remote work.

Onstage he also responded to the ongoing critique and scrutiny around Clubhouse’s fall from hype. “The nice thing about having done this a few times before is that you tend not to get caught up in your own hype. When things are going like gangbusters, you sort of say that’s gonna come down when, when things are hard, you say we’re going to figure this out.”

Going forward, Clubhouse’s smaller team will be focused on building “Clubhouse 2.0.”

“As remote living, empty scrolling and Zoom meetings become more common, this is truer than ever. 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,” today’s blog post says. TechCrunch reached out to a number of Clubhouse’s investors and many expressed not yet knowing what the remaining team there is cooking up. Last year, Davison mentioned the movement of Clubhouse activity away from “live podcast” and broadcasting behavior and into private rooms, intimidate internal conversations.

The business still has time to offer further answers. Clubhouse did confirm that it has “years of runway left” and now has more as a result of today’s layoffs. The company is not enacting a hiring freeze as of yet, a spokesperson said.

Those with knowledge about Clubhouse can reach Natasha Mascarenhas on Twitter @nmasc_ or on Signal at +1 925 271 0912. Anonymity requests will be respected.