Who Made Clubhouse App? Paul Davison, a Founder in a State of Perpetual Motion

Paul Davison went from Highlight app that flatlined after millions of dollars of investment to co-founding Clubhouse.

By Ellen Huet and Brody Ford, Bloomberg | Updated: 18 March 2021 14:58 IST

Who Made Clubhouse App? Paul Davison, a Founder in a State of Perpetual Motion

Paul Davison shows an increasing awareness that a fast-rising number of users brings some rotten ones

Highlights

Davison co-founded Clubhouse in 2020
Clubhouse is in many ways the opposite of Highlight
Unlike Highlight, Clubhouse has outlasted the initial burst of excitement

Nearly a decade ago, South by Southwest was known as a launchpad for Internet phenomena: The annual tech and arts festival was where Twitter broke out and where masses of 20-somethings made group messaging apps a thing.

In the spring of 2012, the king of the conference was Highlight. Paul Davison, then 32, had released the app six weeks earlier with a proposition that was scary yet intriguing. It tracked users' whereabouts to show them profiles of people nearby with similar interests or shared connections. For that week in Austin, Texas, everyone wanted to try it. Phones buzzed and buzzed and buzzed with Highlight notifications. Venture capitalists wrote checks for millions of dollars. But within a year, the app was deemed too invasive to go mainstream and had essentially flatlined.

Nine years later, few people have even heard the name Highlight. A lot of people, however, have heard of Clubhouse, which Davison co-founded last year. Clubhouse is in many ways the opposite of Highlight, and even subsumes the role played by South by Southwest. Clubhouse is a virtual conference hall with different rooms for people to talk about whatever topics they like and invite guests to listen. It only uses audio.

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South by Southwest, the venue that launched Davison's star in the tech industry, kicks off Tuesday, not in Texas but on hundreds of thousands of screens. Meanwhile, Clubhouse rages on as a sort of virtual South by Southwest that never ends.

Unlike Highlight, Clubhouse has outlasted the initial burst of excitement. In the past year, the startup raised funds at a $1 billion (roughly Rs. 7,260 crore) valuation, signed up more than 10 million users, spread to dozens of countries, and hosted talks with some of the biggest celebrities in Hollywood and Silicon Valley. Venture capitalists, it seems, are ready to anoint Davison as a true king.

The app closely follows Davison's style and interests. Over the past 15 years in the Valley, the Clubhouse chief executive officer has explored the depths of how technology can be used to connect people in new ways. He's frequently embarking on the next project and proselytises a seemingly genuine belief that most people are good-hearted and well-intentioned, according to those who have worked with Davison.

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“That's definitely his DNA,” said Kamran Ansari, a venture capitalist who first met Davison when they were both at Stanford University's business school. “His mind doesn't go to, ‘What if someone is stalking you? Or a criminal is connected to you and sees who you are?' His mind doesn't think that way. It comes back to being an optimist, without worrying about these edge cases.”

At times, the results have made people uncomfortable or demonstrate a failure to consider safeguards against potential abuses. Clubhouse has been used to spread misinformation about COVID-19, racism, and misogyny. The live and ephemeral nature of the app make policing such content difficult.

A Clubhouse spokeswoman declined to make Davison available for an interview. She said racism, hate speech, abuse, and false information are prohibited on the app and that moderation has always been a top priority. In a sign that Davison may be learning from past privacy controversies, Clubhouse backtracked this week from demanding access to a user's full contact list in order to invite friends.

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Davison's path to the Valley was smooth and unsurprising. He attended a high school known for its high achievers in San Diego, where he was a member of a club for “emerging leaders and entrepreneurs.” Then Stanford undergrad, Stanford business school, consulting at Bain & Co.

After getting his MBA in 2007, Davison joined Metaweb, a startup trying to create a database of the world's information. They wanted to make complicated concepts accessible to regular people and spent a lot of time in front of a whiteboard trying one idea after another. Davison was driven and intense but “not in a macho way,” said Gavin Chan, who worked closely under Davison at the startup. “He's got more momentum than force. Paul is just always moving forward.”

Metaweb wasn't the place for him to keep doing that. Google acquired the business in 2010, and Davison went to work as an entrepreneur-in-residence at Benchmark, one of Metaweb's venture capital backers. He emerged with a new idea: using a smartphone's location to connect people in proximity to one another.

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Davison established a company called Math Camp, a reference to a two-week crash course offered to Stanford business students before real classes began. Math Camp's first product was Highlight. To promote it, the company paid young people to wander around downtown Austin during the conference in 2012 wearing white turtlenecks with the Highlight logo on the front. The workers showed South by Southwest attendees how the app could alert them to the presence of, say, a woman nearby who shares a mutual acquaintance and an interest in opera.

A few months later, Davison penned an opinion article for CNN arguing against “cyberphobia.” Technologies seem ridiculous or scary at first, he wrote, but that's just because they're new. “Knowing more about the world around you just makes life better,” he wrote. “In another decade, we are going to look back and wonder how we ever got by without this.”

Some of his former teammates aren't sure his thesis has aged well. “I don't think anything like Highlight, in how it was conceived, would work as well today,” said a former Math Camp employee, who asked not to be identified to avoid professional repercussions. “Paul is very optimistic, almost to a fault.”

After a white-hot week in Austin, interest in Highlight cooled. It was unclear what the app should be used for. Dating? Networking? Connecting with friends? Many people never got comfortable with the privacy implications, and those who did got annoyed by how the GPS-intensive app drained their batteries. As people drifted away, Math Camp spent the next couple of years trying to see what else might catch on.

Pushing the digital boundaries of what people are comfortable with became a Davison signature. In those days, that involved building consumer apps that nudged people to share more by default. “He's just constantly generating ideas,” said Ansari, the venture capitalist who was an investor in Math Camp. “Very creative, very high energy.”

When Ansari visited Davison during this period, the entrepreneur often had some new gadget he was trying out. “He was one of the first people I saw wearing Google Glass,” Ansari said.

In 2015, Math Camp released an app called Roll, which asked users to share every photo from their camera roll to a set of friends. The startup recruited college students to promote it on campus. Carolyn Liu said she was paid around $1,000 (roughly Rs. 72,500) to pass out stickers and urge her classmates at the University of the Pacific in Stockton, California, to download the app. “People got kind of weirded out, but then some people really liked it,” she said. Liu remembers Davison interviewing her about why she and her friends took pictures and what they took pictures of. “Roll was kind of a flop, but also, you could tell that he was learning along the way,” Liu said.

The next year, the company relaunched the automatic-photo-sharing app as Shorts, which caught the attention of technology enthusiasts who were sceptical of the concept. “It was pretty aggressive,” said Ansari. A Verge article called it “insane.” In response, Davison said, “We enjoy thinking about places where we could push people a little bit.”

By this point, Davison recognised Math Camp was losing momentum. He met with the CEOs of Dropbox and Uber. about selling the business, said Ansari, who by then was running corporate development at Pinterest. Ansari convinced his bosses and Davison to do a deal, and Pinterest acquired Math Camp. But Davison soon became frustrated with how life inside a bigger company moved slower than his regular, frenetic pace.

Davison left Pinterest after about two years and in 2019 reconnected with an old acquaintance named Rohan Seth. At the time, Seth was looking for help raising money for a research effort to treat his young daughter's rare disease. The two decided to give social media startups “one last try,” they wrote in a company blog post. They introduced Talkshow, which eventually morphed into Clubhouse.

Clubhouse quickly generated buzz among Valley insiders selected to try the service, including some top venture capitalists who invested in the parent company Alpha Exploration within just a few months. Andreessen Horowitz first bought shares valuing the company at $100 million (roughly Rs. 730 crores) and then again at 10 times that price. (Bloomberg LP, the parent company of Bloomberg News, has invested in Andreessen Horowitz.)

“I look at a lot of social products,” said Ryan Hoover, a founder of the app directory Product Hunt and an early investor in Clubhouse. “Very few capture this magic, this feeling of, This is fresh, this is new, this is exciting.”

The qualities that make Clubhouse feel casual and personal can also facilitate deception, critics have said. The app's guidelines effectively forbid recording, which has made Clubhouse a seemingly safe place to spread lies or bully without consequences. But Hoover said he believed the ephemerality makes the app special. “It better reflects how we communicate in the real world and encourages a more authentic conversation,” he said.

Like Highlight, Clubhouse doesn't give people a clear reason to use it, and that has actually turned out to be an asset. In the absence of any prescriptions, Clubhouse can be a place to hear Elon Musk talk about Bitcoin, get an audio news briefing, listen to musicians sing lullabies or learn how to game the stock market. In one recurring room, people just make whale moaning sounds together.

Davison shows an increasing awareness that a fast-rising number of users brings some rotten ones, but it doesn't seem to have changed his views on the goodness of people. “The thing about Clubhouse is, we're building it for everyone in the world, and the reality is, there are bad actors in the world,” he said in a Clubhouse talk last week. “There are people that aren't necessarily ill-intentioned but enjoy testing the limits of systems and trying things out.”

On Sunday, when Davison announced that Clubhouse had stopped prompting users for full contact list access, he insisted the data request was innocent. “It's totally optional,” Davison said in a talk on Clubhouse. “It does make the experience a lot better for you, I think. And it's not used for anything else. But if you don't want to, that's totally fine.”

Clubhouse turns a year old on Wednesday. Davison has said he wants to expand the room capacity — usually capped at around 5,000 listeners — to an infinite size, so they can accommodate musicals, news conferences, sports post-game analyses, political rallies, and big company all-hands meetings. And while he's excited about those, Davison is even more jazzed about what he can't envision yet.

“The ways people use Clubhouse are just mind-blowing to me,” Davison told a virtual roomful of listeners, his voice quickening. “If you think about how video evolved, we sort of went from this world where you had broadcast television, and we had four channels, and everyone watched the same thing at seven o'clock on a Thursday, to cable television in the 90s, where you had 400 channels suddenly, and that led to 24-hour news channels and golf channels and fishing channels and home shopping networks.

“And then we got YouTube, which was crazy,” Davison continued. “And suddenly you got unboxing videos and ASMR and top-10 videos and crazy things that no one ever would have expected. Because people are amazing, right?”

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