Clubhouse, the popular audio-based social networking app, has announced a significant restructuring of the company. The move comes despite the app being valued at more than $4 billion and surviving the shift back to normality post-Covid.
Founders Paul Davison and Rohan Seth sent a message to all employees informing them that over 50% of the workforce will be laid off in the coming days. The decision was made after the company failed to evolve and adapt to the changing market conditions.\
In the message sent to the employees, Davison and Seth explained that Clubhouse was originally designed to bring people together and facilitate conversations, but with the world reopening post-Covid, it has become increasingly difficult for users to find their friends on the platform and engage in long conversations. The company needs to evolve to find its role in the world, and this requires a period of change.
Davison and Seth stated that they have tried to make the changes with the current team size, but it was difficult to communicate the strategy to cross-functional teams. This has resulted in people feeling blocked and underutilized. As a result, they have decided to reset the company, eliminate roles, and take it down to a smaller, more product-focused team. They believe that a smaller team will give them focus and speed and help them launch the next evolution of the product.
The founders expressed their regret for the layoffs and pledged to support the departing employees. They will provide severance pay, equity acceleration, healthcare, and career support to everyone who is impacted. They also allowed the impacted employees to keep their company-issued laptops to help them research and apply for new roles. Additionally, they will provide immigration support for those who are on visas.
For those who are staying, Davison and Seth acknowledged that it is a difficult time as they say goodbye to their colleagues and feel uncertain about the future. However, they assured the remaining employees that the restructuring is necessary to ensure the future of the company is strong.
Davison and Seth concluded the message by stating that Clubhouse 2.0 has a clear vision, and they believe that with a smaller, leaner team, they will be able to iterate faster on the details and build the right product. They will regroup as a team later in the day to talk about the changes and begin the path forward together.
The news of the layoffs has been met with mixed reactions. While some praised the company for providing a generous severance package, others criticized the founders for failing to effectively manage the company’s growth and evolve the product to meet changing market conditions. Despite the setback, many users and investors still believe in Clubhouse’s potential and are eagerly awaiting the launch of Clubhouse 2.0.
