Information Cascade and Clubhouse
“Clubhouse appeared out of nowhere in early 2021. They went from being an unknown brand to the hottest topic in the marketing business world. Then, they quickly disappeared.” Clubhouse created a community of tons of voice-chat rooms on various topics with no video, text, or recording, and a capacity of 5,000 users. You may join a chat room without the host’s permission, and everyone in the room can “raise their hand” to talk, as long as the host agrees to turn on their mic. Unlike regular social media apps, you must be invited to join Clubhouse by existing users.
It first invited some celebrities and influencers, and later as a marketing strategy, it invited some of the most influential people in several industries such as technology, finance, sciences, and literature. For example, Elon Musk built a Clubhouse chat room called “Elon Musk on Good Time” and announced it on Twitter, thereby resulting in a substantial increase in Clubhouse members with an invitation code on eBay selling for more than $100.
The information cascade is thus triggered by such Clubhouse user activity. When people are invited, they must make a decision (whether to join Clubhouse or not) and do so sequentially. They also have some outside information (personal hobbies, etc.) to help them make that selection. Others do not have direct access to such outside information but can speculate based on the user’s decisions. However, the information cascade forced many users to make blind decisions, resulting in the app’s abrupt demise. Clubhouse’s most appealing feature was an “online elite salon,” which created a closed, elite, and niche ambiance through an invitation system. Users attracted by Clubhouse via the information cascade were not loyal users, but rather those who came to just watch the fun, and such user bases were obviously not solid. People may believe that the invited users are elite and famous, therefore they will join in the footsteps of those who came before them. However, this does not imply that they are engaged in the content, thus when the celebrity leaves the app, users leave as well, resulting in Clubhouse’s eventual failure.
Reference:
Analysing Clubhouse’s Growth Strategy – Invite Only Exclusivity