In Silicon Valley, where the race to become the next breakout global app can be relentless and absurd, two apps have captured the zeitgeist the most in the past few months—financial trading app Robinhood and voice-led social media app Clubhouse. If the first has just been the ground zero of an apparent mass insurrection against high finance, the latter is witnessing the emergence of a social media minus the bots and the viciousness and the paid propaganda, centred around the authenticity and intimacy of voice.
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Their rise marks a shift from the Indian-American dream of past decades, when the ideal career path would see a techie secure stable jobs at large and profitable IT companies and rise up the ranks. While Indian-American executives have had a dream run helming storied tech companies—Google, Microsoft, IBM and Adobe are all currently led by such leaders—success stories as founders at major startups have been less common.
Bhatt, a first-generation immigrant and part of the American-Indian billionaires’ club, spearheaded Robinhood to an $11.7 billion valuation with its latest billion-dollar funding round. Seth’s Clubhouse turned unicorn this year within less than a year of founding, and is enjoying quite the moment in the sun, finding favour with tech and Hollywood elites who like to drop in into rooms and participate in conversations. Elon Musk, Drake, Tiffany Haddish and Mark Zuckerberg have been in Clubhouse rooms, making it the buzziest social media phenomenon of the moment.
“Indians are part of the cultural fabric of Silicon Valley today, and there is a mild stereotype that an Indian will be successful owing to their legacy with tech in the Valley. In the 80s, Indians did face heavy discrimination, and they were considered ‘outliers’. But the community came together and uplifted each other,” said India-American technology entrepreneur and academic Vivek Wadhwa.
In the 1980s, American venture capitalist and co-founder of Sun Microsystems, Vinod Khosla, became one of the first Indians to make it big in the Valley.
While Indians are now part of the ‘Big Boys’ club at Silicon Valley, women and African-American founders still face discrimination, Wadhwa said.
While eight-year-old Robinhood disrupted brokerage fees through concepts of free and fractional trading focused on millennials, Clubhouse is bringing access to free-speech and making power figures more accessible to global audiences through its app.
Through fractional trading, Robinhood allowed users to invest in top stocks of Amazon Inc., Alphabet Inc. (parent of Google) for as little as $1.
“The authenticity of what founders are building shows in the Clubhouse product. With the medium, it is taking distractions away from video and giving access to global free speech. These firms are changing user behaviour in a big way,” said Priya Rajan, managing director, India, Silicon Valley Bank, which has invested in more than 30,000 startups with $116 billion in assets.
Bhatt’s parents moved to the US when his father joined a PhD programme in theoretical physics in Alabama. He himself graduated in physics from Stanford, where he met Robinhood co-founder Vlad Tenev. They founded two startups in New York before heading back to the Valley to start Robinhood.
Clubhouse’s Seth, who grew up in New Delhi, also met his co-founder, Paul Davison, at Stanford. During his stint at Google Inc., he was an early member of its mobile team, working on its Location product, testing concepts like Google Latitude, nearby friend alerts and location-enabled chat status.
Seth’s work at the search giant also included voice access to email and calendar, which could have laid the foundation to his latest voice-led startup Clubhouse. He also co-founded social communication platform Memry Labs in 2014, later acquired by Opendoor.
Seth also started Lydian Accelerator in 2019, a non-profit research accelerator to work on personalized genetic treatment after his daughter Lydia was born with a critical mutation gene called KCNQ2.
Bhatt and Seth didn’t respond to requests for comment.
“Some of the best products in the world are simple and do their key function very well. That’s one of the strongest reasons Clubhouse and Robinhood have managed to achieve what they did,” says Anand Prasanna, managing partner, Iron Pillar, a tech-focused investment fund.
Both Robinhood and Clubhouse have been big gainers from major upheavals—the 2011 ‘Occupy Wall Street’ movement against economic inequality gave birth to Robinhood, and the covid-19 pandemic and the quest for more authentic ways to connect has arguably helped the popularity of Clubhouse.
Both startups have leveraged the ‘exclusive access’ strategy. By the time Robinhood launched on the App Store in 2014, it already had a wait-list of a million. Clubhouse has also adopted an ‘invite-only’ strategy.
“After Musk’s talk on January 31, demand for Clubhouse invites have skyrocketed on channels like Facebook, Reddit, eBay, and Craigslist. In China, invitations are being sold on Alibaba’s second-hand marketplace Idle Fish. We have seen the daily downloads go from 150K to more than 350K in the following 5 days, and over a million installs just in that one week period after January 31st. This is enormous growth, for a startup that’s been around for less than a year,” said Madhu Shalini Iyer, Partner at Rocketship.vc.
Clubhouse was blocked in China earlier this month, citing issues around censorship.
Their popularity notwithstanding, both have faced roadblocks and stare at challenges ahead. Clubhouse was blocked in China in February, prior to which it was a rare American social network that wasn’t banned in that country. It also faces renewed competition from larger social media firms, with Facebook and Twitter both said to be working on similar products.
“Clubhouse is simply noise right now. It’s still to be seen how the trend will sustain and whether people will have time anymore to listen to other people talk as the initial euphoria dies. The value will be if chats can be recorded and transcribed for public consumption. For now, the exclusivity of invites and buzz is working for them,” Wadhwa said.
“Clubhouse is backed by (the venture capital firm) Andreesen Horrowitz, and it’s typical of their firms to make noise at the start, but one needs to see where they are now.”
Robinhood has faced several lawsuits, including one from Massachusetts Securities Division, which accused it of ‘gamifying’ investing without proper safeguards as well as from the US Securities and Exchange Commission for allegedly misleading customers on how it makes money, leading to a civil penalty of $65 million.
In November, Bhatt stepped down as chief executive to focus on the firm’s product development.
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