COVID-time popular app Clubhouse eliminating 50% of its employees

An invite-only social audio app Clubhouse, which gained immense popularity during the COVID times, is now struggling with its business growth. The company has now decided to eliminate 50% of its total employees as it aims to 'reset' the business to achieve growth. 

However, it is still unclear because the company did not reveal the exact number of employees impacted by this round of layoffs. According to the Clubhouse's LinkedIn page, the company has around 200 employees. Considering this number, this would eliminate around 100 employees.

The development follows the array of ongoing layoffs by major tech companies like Google, Amazon, Microsoft, and Meta. Technology companies aren't the only ones responsible for such layoffs; companies like Disney, Netflix, Buzzfeed, and Amazon Studios also joined the layoffs trend.

Talking about Clubhouse, The founders listed that ever since the world opened up after the Covid pandemic, very few people have used the Clubhouse app. Meanwhile. Clubhouse has also announced that it will be offering 4 months of additional severance pay to all the impacted employees. Besides this, it will also pay for the healthcare expenses till August 31, 2023.

What founders said?

Team, Today, we announced that we’re scaling back our org by over 50% and saying goodbye to many talented, dedicated teammates in the process. We’re deeply sorry to be doing this, and we would not be making this change if we didn’t feel it was absolutely necessary.

If you are among those impacted, you will receive a calendar invite to a 1:1 meeting with a manager in your department within the next 10 minutes. In the meantime we wanted to provide everyone with more context around why we made this decision and how we will be supporting the individuals who are departing.

Resetting Clubhouse

As we’ve talked about in team meetings, Clubhouse was designed to be a place where you could come together with friends, meet their friends and talk. It works really well when your friends are on the product and you have the time to meet up. Millions of people in our core community know this. But 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. This requires a period of change.

Rohan and I have tried to make this work with our current team size, but we haven’t been able to do it effectively. 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. The end result is that it’s hard for teams to coordinate, people feel blocked by us, and brilliant, creative people are left underutilized.

In order to fix this we need to reset the company, eliminate roles and take it down to a smaller, product-focused team. We arrived at this conclusion reluctantly, as we have years of runway remaining and do not feel immediate pressure to reduce costs. But we believe that a smaller team will give us focus and speed, and help us launch the next evolution of the product.

Supporting those impacted

There is no good way to do this, and this is no consolation, but it’s important to us that we work hard to support the people who are departing and recognize how important their work has been to the history of this company. Here are some of the resources we will be providing to everyone who is impacted:

Severance pay. We will pay salaries for the rest of April, plus 4 months of additional severance for all departing employees. This means everyone affected will receive their full salary until Aug 31, 2023.

Equity acceleration. We want everyone who helped build the company to have the opportunity to participate in future upside. We will accelerate everyone who is impacted to their Aug 2023 vesting date, and for those who haven’t reached their one-year vesting cliff, we'll also waive the cliff and provide pro-rata monthly vesting through their Aug 2023 date.

Healthcare. We will pay for COBRA through Aug 31, 2023 for everyone affected, so they can continue to receive full healthcare coverage for themselves and their families during this period.

Laptops. We will allow everyone who is impacted to keep their company-issued laptops, to help them research and apply for new roles.

Career support. We will help departing employees in finding their next role. This includes partnering with our investors to help connect them with other companies, serving as enthusiastic references and aiming to support them however we can. If you are impacted and would like career support, you can submit your information here and let us know what services would be most useful.

Immigration support. We will be providing support for those who are on visas. If you are impacted and on a visa, you will receive more information in your 1:1 meeting.

As a founder you work tirelessly to build a great team and dream of one day having coworkers like you. The people leaving today are without exception brilliant and humble. We will always be grateful for the role that each of you has played in building Clubhouse and we would rehire any of you in a second if we could. Our hope is to rebuild and one day earn the right to do that. In the meantime, we know that people here will go on to do great things, and that other companies will be extremely fortunate to hire you.

For those who are staying, we know this is a difficult time for you as well. Not only are you saying goodbye to people you’ve built alongside, but many of you will be feeling uncertainty about the future. We want you to know that we’re making this change to ensure that our future is strong.

The path forward

The world needs what Clubhouse is building – a better way for all of us to hear our friends’ voices, have more meaningful conversations and feel connected to the people around us. 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 will be a very hard day, and for the rest of this morning we will prioritize meeting 1:1 with everyone who was impacted.

Those who are not impacted will receive a calendar invite for a brief team meeting at 3pm PT. Here we will regroup as a team, talk about today, and begin the path forward together.

Paul and Rohan.

Also Read:

• Xpressbees raises $40M from Malaysia's Khazanah Nasional Berhad