Not All Traction Is Equal

With the recent launch of Threads via Instagram (Meta), a lot of comparisons were drawn between Threads and the early stages of Clubhouse. 

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Could Threads have the same network effect as Clubhouse? Does it pose any real threat to Twitter?

Before diving deeper into Threads and its potential market value, it’s worth taking a closer look at Clubhouse, the VC darling that shot up to $4B in valuation pre-revenue within a very short period of time after launch.

It’s obvious by now that Clubhouse (led by a16z) is a bust. But in the earlier stages, its user growth traction was every VC’s dream. A General Partner at a16z shared during Techweek LA, that what sold him was an experiment he called the ‘Atlanta Test’, sharing the app with communities outside of the tech bubble and away from major markets.

And at first glance it worked 💰!! Creators and entrepreneurs from everywhere adopted the app rapidly and began sharing it, validating the app in the process with rapid week over week growth. That’s traction right?!

So why did Clubhouse fail?

According to analysts and writers, it failed because it lacked substantial moderating tools to ensure the quality of content. However that explanation is flawed as moderation is technically easy to implement. Twitter and other social platforms also lack a comprehensive moderating system, and yet it lives on.

The real answer lies in the subject matter — “Not all traction is equal.”

Traction measurements used by analysts especially in the earlier stages provide merely a partial picture. It’s not enough to simply point to a general lack of product market fit, or a lack of network effect, or that the team failed their growth hack experiments and adding features.

The lack of clarity is why I started VCMO, to assess quantitative and qualitative demand, user adoption, and retention, looking through a fixed product stack in our daily lives that modifies only with certain variables. You can read more about the framework here.

Demand for New Social Network(s) /-

It is widely acknowledged that the barrier of entry for a new social network is extremely highly. There is close to zero demand for “another social network”, primarily because through our digital world, we are already omni-connected via massive social networks such as Facebook, Instagram, Twitter, Snapchat, and WhatsApp.

Adding another social app to the stack would reduce ‘time spent’ on other platforms, but with an ever increasing amount of content and engagement to ingest. The cost of switching or adding another network is just too high, keeping most users locked in within current networks.

Social networks require daily active users (DAUs) to remain viable, and for Clubhouse to establish itself as ‘one’ of the social networks, it’d need to offer unique value (in this case: live audio rooms), that is quantifiably 10x better.

Demand for Live Audio Rooms /+

The early growth of Clubhouse validated that there is genuine demand for live audio social experiences, however it did not validate the need for a standalone audio-based social network. The network effect largely took place off-app, within Twitter, a signal that audio is more valuable as a feature. Clubhouse had huge gaps to fill, with established features from other social networks, including user scale and communication tools.

Other Key Factors

Technology: Clubhouse developed their live audio features using open source tools from Agora (webRTC). Twitter on the other hand already supported live media, including video streaming. A Clubhouse like experience is nothing more than a User-Experience shift, which is exactly what Twitter, Spotify, Discord and others did, and in a matter of weeks. /- 

Supply of time: Usage of Clubhouse was skewed due to the sudden supply increase of time during the pandemic. Users had disposable and available time to experiment and participate in another social networks. However, a temporary increase in time supply should not be confused with sustaining demand. Usage for Clubhouse faltered shortly after Twitter launched Spaces and the pandemic began to subside. /-

Supply of Experts /Content: Clubhouse did not have a moderation problem, it had a supply problem. The growth of Clubhouse required growth in available content, converting users to panelists and hosting their own rooms.

However becoming a creator on an audio based social network is more difficult than writing a short tweet. Creators, whether experts or not, were posing as one. The saturation of ‘expert panels’ ultimately cancelled out the core value of Clubhouse, and facilitated unreliable content from non-experts. /-

So what about Threads?

(Full disclosure) At the time of writing this (July 12th), I have not used Threads, and likely won’t for a while. Therefore I will refrain from product, UX, and design comments.

While I understand the reasoning behind Meta’s choice to release their own Twitter, the truth is there is little to no room within our daily application stack for another social network.

Here is Threads’ reality:

• A reduced network of your Instagram

• Word count limitations, but less visual content than IG

• Near identical content as your Twitter

• One more social network to manage!!

Whether you love or hate Twitter’s current moderating strategy, replacing it with a platform like Threads, will likely create another echo chamber, not too unlike Truth Social. Twitter, with all its flaws, remains the global town square, and desperately need diverse voices to be represented. Meta is in no better position to moderate content than Twitter, Google, or any other big tech.

If you think about it, if Threads seem familiar it’s because Facebook already attempted their version of Twitter when they launched status updates in 2006.

You could say that Threads is Facebook Status 2.0. Nothing new here…

My 2 year prediction for Threads:

• 35% MAU conversion (IG to Threads)

• <10-15% long term retention

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