📱🕷️The Dark Side of PLG

Insights

Imagine building an app so exclusive that invites sell for $100 on eBay. Celebrities flock to it, investors throw money at it, and the world can’t stop talking about it. Elon Musk and Oprah hosted rooms.

Fast-forward to today? It’s a ghost town and a classic example of the dark side of PLG.

It’s the story of Clubhouse, the audio-chat app that became a pandemic darling before fading into obscurity. What went wrong? And what can you learn from it?

In this issue, I cover

• PLG Silent Killers

• Vanity Metrics that lie 🤥 

• Do you need Salespersons with PLG?

• ClubHouse Case Study

• 🆕 AI Tool of the Week

Let’s dive in! 🚀 

PLG Silent Killers

You’ve nailed the freemium model. Your user numbers are soaring, and the app is going viral. But lurking beneath those glowing dashboards are three silent killers—pitfalls that sabotage even the hottest PLG darlings. They don’t announce themselves with alarms or red flags. Instead, they chip away at your growth until suddenly… It’s too late.

Let’s expose them before they sink your product.

1. The Freemium Fantasy

Free users are like confetti—fun at first, but eventually, you’re left sweeping up the mess. PLG’s promise of "viral growth" often masks a harsh truth: freeloaders rarely convert to paying customers.

The Fix:

• Create a "must-have" paywall.

  • Example: Slack’s free tier caps message history, and Zoom has a 40-minute limit. Teams outgrow it → upgrade.

• Avoid the "bottomless free tier." Dropbox learned this lesson—too much free storage = no urgency to pay.

2. Vanity Metrics

Vanity metrics look good on paper but do not reflect real success. They look good on reports but hide the real story. Think “1 million downloads!” or “10,000 signups!” They’re exciting and easy to celebrate, but utterly meaningless if users aren’t sticking around or paying up.

This can be mitigated by:

• Tracking behavioural metrics: How often do users return? How many hit the “aha moment”? and

• Tracking monetisation velocity (free-to-paid conversion rates).

3. The Myth of “No Sales Team”

Even PLG poster child Figma has a sales team. Why? Enterprises won’t sign $100K contracts via self-serve.

A Hybrid Model works best for most products. Let SMBs self-serve and hire closers for enterprise deals.

Clubhouse: A Case Study on PLG Dark Side

For those who missed the hype: Clubhouse is the audio-chat app that dominated lockdowns in 2020-2021, founded by Paul Davison and Rohan Seth in March 2020 with a simple premise to drop into live, invite-only voice conversations on topics like tech, culture, entrepreneurship, etc.

At its peak:

• $4B valuation (April 2021)

• 10M+ weekly users, including Elon Musk, Oprah, and Mark Zuckerberg

• Invites sold for $100+ on eBay

But by 2025, Clubhouse is a digital ghost town.

How Clubhouse Became a Cultural Phenomenon Overnight

Clubhouse’s rise was a perfect storm of timing, exclusivity, and star power:

• Pandemic Timing: Launched in March 2020, it tapped into lockdown loneliness and Zoom fatigue. People craved spontaneous, human connection without cameras, no prep, just voice. I definitely fell for the hype. It was good.

• Invite-Only Exclusivity: The app required an invite to join, creating FOMO (Fear of Missing Out). Invites sold for $100+ on eBay, turning access into a status symbol.

• Celebrity Magnetism: Elon Musk’s 2021 interview sent downloads soaring. Oprah, Mark Zuckerberg, and even Drake hosted rooms, making Clubhouse feel like a VIP backstage pass.

• Audio-Only Novelty: In a world saturated with video calls and TikTok clips, the simplicity of voice-only conversations felt refreshingly raw and authentic.

Takeaway:
Clubhouse mastered momentum, but momentum fades. Virality ≠ sustainability.

The Fatal Flaws That Crushed Clubhouse

The cracks in Clubhouse’s foundation appeared fast:

• No Monetisation Strategy:

  • Tried everything (tips, subscriptions, NFTs). Users never felt a reason to pay.

• No Sticky Use Case:

  • Audio chats were fun but short-lived. Once pandemic boredom eased, users asked: “Why come back?”

• No Defence Against Competitors:

  • Twitter Spaces copied the model in weeks. Clubhouse had no unique tech or features to protect its turf.

• Scaling Failures:

  • Stayed iOS-only for over a year, alienating Android users.

  • Prioritised growth over community moderation (e.g., hate speech scandals).

Takeaway:
Clubhouse may have confused hype with product-market fit. Without a core value proposition, even the loudest buzz dies.

What Every PM Can Learn from Clubhouse’s Collapse

• Lesson 1: Build a “Must-Pay” Trigger

  Identify the one feature users can’t live without, then gate it behind a paywall.

  • Example: Slack’s message history cap forces teams to upgrade. Clubhouse gave away everything for free.

  • Tip 💡: Run a “paywall stress test.” Temporarily restrict a feature and measure user backlash. If no one cares, it’s not a must-pay trigger.
    

• Lesson 2: Solve a Real Problem, Not a Trend.

  • In other words, build a painkiller, not a Vitamin. Clubhouse solved pandemic boredom, which is not a lasting need. Figma solved the collaboration pain, a timeless issue.

  • Tip 💡: Ask “Will this problem exist in 5 years?” “Is this problem a painkiller or a Vitamin?”.
    

• Lesson 3: Anticipate Competitors

  • If your USP (Unique Selling Proposition) can be copied in a weekend, you’re in trouble. Build a moat (e.g., proprietary tech, network effects).

  • Create a moat:

    • Network Effects (e.g., LinkedIn’s professional connections).

    • Community (e.g., Reddit’s subcultures).

    • Proprietary Tech (e.g., OpenAI’s GPT-4).

  • Tip 💡: Do a “copycat audit.” If competitors can replicate your USP in a month, pivot. Read about a successful pivot story here. (Hint: It’s a messaging platform we love and hate at the same time 😃 )
    

• Lesson 4: Monetise Early

  Clubhouse waited too long: 18 months to launch paid features. By then, users expected everything to be free.

  • Don’t wait for scale. Calendly’s freemium model includes paid tiers from Day 1.

  • Tip 💡: Use a “reverse funnel.” Start with paid tiers, then add a free plan to fuel growth.
    

• Lesson 5: Prioritise Retention, Not Just Growth

  Retention > Vanity Metrics

  • Clubhouse chased downloads. Duolingo tracks daily streaks to keep users hooked.

  • Tip 💡:

    • Track metrics that predict longevity:

      • DAU/MAU ratio (How many monthly users return daily?).

      • Feature adoption rate (Are users engaging beyond signup?).

    • Build “hooks” into the product, e.g. Duolingo’s daily streaks.

The Takeaway:
PLG isn’t a shortcut—it’s a strategy. To last, you need value, not just virality.

Final Thoughts on Clubhouse.

Clubhouse in 2025 is a platform that has gone through a dramatic boom-and-bust cycle. It is no longer the dominant force in social audio or even social media mainstream it once was, but continues to adapt its product, seemingly aiming for a more niche community focused on voice-based conversations and group messaging. Its long-term sustainability will depend on its ability to retain a dedicated user base and potentially carve out a unique value proposition in the current social media environment.

🚦How to Avoid the PLG Trap

Ask These 3 Questions

1. “What’s the one feature users would pay for?” (If you don’t know, run surveys.)

2. “Can competitors copy us in a weekend?” (If yes, build a moat urgently.)

3. “Are we tracking revenue… or just vanity?”

Try this PlayBook

Pre-Launch: The “Smoke Test” Hack
Before coding anything, test the demand for paid features.

1. Add a fake “Premium” button to your landing page (e.g., “Advanced Analytics – $20/month”).

2. Track clicks. If >5% of visitors click, you’ve got demand.

3. Example: Buffer tested pricing tiers this way and doubled conversions.

   Pro Tip: Use a tool like Unbounce to create fake paywalls fast.

Post-Launch: The “Revenue SWAT Team”
A cross-functional squad focused on monetisation.

1. Hire a “Closer”: Someone from sales or CS who can upsell based on usage data.

   • Example: If a user creates 50 Miro boards, offer them an enterprise plan.

Real-World Example: How Figma Escaped the PLG Trap

1. Question 1 Answer: “Designers would pay for real-time collaboration.”

2. Question 2 Answer: “No, our browser-based tech is hard to clone.”

3. Question 3 Answer: “We track ‘teams activated,’ not just signups.”

Playbook in Action:

• Pre-launch: Tested collaboration with a waitlist.

• Post-launch: Hired enterprise sellers to close Adobe defectors.

Conclusion: The Double-Edged Sword of Product-Led Growth

Let’s be clear: Product-Led Growth isn’t broken, but it can be the end if not carefully implemented. Clubhouse’s story isn’t a death knell for PLG; it’s a wake-up call. The difference between thriving and nosediving comes down to one word: strategy.

Slack, Figma, and Calendly didn’t just “go viral.” They engineered products that solved real, urgent problems and then leveraged PLG to scale.

The lesson? PLG isn’t a shortcut to growth. Use it to carve out value, not just noise.

AI Tool of the Week: Perplexity AI

Link to Try: Perplexity.ai

What it is: A conversational search engine powered by AI that delivers real-time, accurate answers with direct citations from the web. Think of it as ChatGPT meets Google, but faster and more research-focused. But unlike ChatGPT, it cites sources and stays updated with the web. Perfect for research & busy professionals who need answers fast.

What it does:

• Answers complex questions with up-to-date information (no knowledge cutoff).

• Provides sources/links for every claim (great for fact-checking).

• Summarises research, news, or technical topics in seconds.

Use Cases:

• Product Managers: Quickly validate market trends or competitor claims.

• Content Creators: Find credible sources for articles without endless Googling.

• Curious Learners: Get simplified explanations of niche topics (e.g., "Explain quantum computing like I'm 15").

Cost:

• Free tier: Unlimited basic searches.

• Pro tier: $20/month (access to GPT-4, image generation, and advanced features).

Going for An Interview?

🔗 Try Interview Buddy (v2): https://mock-interview-buddy.streamlit.app/
[It’s free, so there’s a general bucket daily limit]

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