| No matter what you think of the concept, you have to admit the Clubhouse crew certainly nailed the name. A social network by Silicon Valley, largely in Silicon Valley and seeded by the Silicon Valley cool kids. There's even a secret password, the requisite invite to join. It's a strategy straight out of sixth grade and it couldn't be more clubby. Clubhouse, presented as "a new type of network based on voice," is about to hit its one-year mark and recently was creeping up on 1 million users. It's essentially a babel of conference room breakout sessions, albeit without the bad appetizers and awkward networking. Most participants are in the app's "audience" — read: listen-only mode — but can get the mic with a digitally raised hand. Investment firm Andreessen Horowitz put up much of the capital and its founders, in turn, host their own Clubhouse show and regularly circulate widely in its warren of rooms. (Bloomberg LP, which owns Bloomberg Businessweek, has invested in Andreessen Horowitz.) The owners are the starting players … and the coaches too for that matter. Basically, Clubhouse did a friends-and-family round; only in this case, it is literally friends and family — yacking away in their little Internet forts. Seeding a market with insiders, however, has been around long before social networks. Wall Street's been doing it for years, cooking up obscure financial products or entirely new markets and then calling on friends to buy in, typically alongside the founding firm itself. It's essentially how the entire IPO process works, from the road-show to the bell. Those with an early invite get a piece of the action, those passing out the invites get a little momentum for their new product. Success is a self-fulfilling process and everybody makes some money, at least theoretically. Publishers know the tricks as well with a conga line of in-house authors reviewing each others' books. In Hollywood, box office success often hinges on the scale of talent a producer can line up, actors and writers who are often producers as well. More recently, media empires have gotten in the game, standing up lucrative "events" businesses with conferences headlined by their own staff. All of this certainly isn't illegal. It isn't even all that slimy. But it doesn't always pan out. Consider Tidal, the once obscure Norwegian streaming music service scooped up by Jay-Z. Even a crush of high profile backers/creators, including Beyonce, Kanye West and Madonna, weren't powerful enough to pull a mass of listeners away from Spotify and traditional music labels. Now, Square has scooped Tidal up in another everybody-wins round of board-room bro hugs. Here's the breakdown from Peter Kafka at recode: "…what you're really left with here is a deal that looks like a way for (Square CEO) Jack Dorsey to move money from his publicly traded company to a company owned by a guy he likes to hang out with." There is always a question of how much impact the insiders have with the outsiders, the sweaty masses. Marc Andreessen probably can't go far in the world without suffering through selfies or, even worse, an elevator pitch. But, with all due respect, he cuts a narrower cultural wake than Beyonce and her husband. Clubhouse has been committed to scaling slowly, lest things break, and refining the UX before nixing the invites and opening the door widely. It also wants to nail down its community guidelines, a savvy decision given the dunking, canceling and trolling rife on social networks these days. A room dedicated to kidnapping Congressmen, for example, might be considered a little tone deaf. For celebrities and so-called thought-leaders, Clubhouse is a bit of a no-brainer — just another platform for burnishing a personal brand — the synthetic steroid of contemporary human capital. And business — tech, in particular — is a spectator sport these days, a national pastime. Indeed, when an A-lister like Elon Musk shows up in a Clubhouse room, the digital crowd swells by thousands. But there's a wide gap between a Cupertino salon and the cat memes and scooter accidents pushing the rest of the social platforms along. We'll soon find out if the Clubhouse kids are as cool as they think. To put it in Sand Hill Road-speak: does it scale?  Featured in Bloomberg Businessweek, March 8, 2021. Subscribe now. | 
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