Can Fame Become MRR?
Cluely proves attention raises money. Can that convert to revenue, and in turn, glory?
As I discussed a couple days ago, Cluely was in the midst of wrapping up their latest round with a16z. They announced it today, bringing in $15M for their Series A. The finer details aren’t out yet, but they’re floating around X dot com. Something like $120M post, which aligns with Roy’s convictions vis à vis hanging onto as much equity as possible.
Many people following Cluely on the timeline have a limited idea of what they do. John Coogan and Jordi Hays on TBPN, major Cluely boosters who have interviewed Roy three times now (including today for his Series A announcement) declared themselves “above” using the app. Instead, they consigned their intern Tyler to use it. Live on the air, viewers watched him test the product ahead of Roy’s appearance on the show.
Once he had it set up, his answers—when posed with questions like “how much has the Chinese government invested in Shenzhen”—were punctuated with pauses and “let me think about that for a moment.” In other words, there’s considerable latency in the product, which anyone whose used it knows about. While answers pulled up ambiently is valuable (as Coogan noted), for most, it’s not very useful at this point.
Now there’s no doubt that Roy’s ability to capture attention in the form of TechCrunch articles and The Social Network inspired launch videos is unparalleled. By the end of the day, in the eyes of most viewers, I fully expect this announcement to overshadow Murati’s Thinking Machines Lab’s gargantuan $2B seed raise. That is real talent. It inevitably spurs the question: how does attention become a company?
That “attention” might be better termed fame. X user “@annaarthoe”, in a post highlighted by TBPN, posited the following this morning:
“the average 21 year old silicon valley founder is no longer driven by greed (ellison) or idealism (jobs), they're driven by fame. its too gauche to become an influencer, so being a startup founder is the best proxy to status”
It’s a great (and tragic) take, relevant to hundreds of young founders “oneshotted by tiktok edits of the social network or performative “how I got into YC” videos.”1 This is largely how I viewed Roy before he launched Cluely as well. Ex post, for better or worse, the company and its viral founder may grow beyond this. That is my question for today.
An alternative lens of Larry Ellison frames him as someone with immense conspicuous consumption needs, but not motivated by greed per se. Rather, he is driven by glory; he wants to win and be recognized. Of Ellison:
“The argument was his true love, the idea itself just someone he dated. The subject he liked best was himself. He was forever telling people “how wonderful he was, how smart he was, and how rich he was going to be,” Feigin said.”
Ellison cultivated a hard-driving sales culture where product came second. Often, he would promise features and not deliver, but by locking customers into multi-year contracts with sticky enterprise software, Oracle would still get paid.2 A distribution first approach works well in B2B SaaS sales owing to this. It does not, however, work well in consumer software, where switching costs are nonexistent and multi-year contracts seldom exist.3 There, an excellent product is all but essential.4
Roy declares himself to be driven by glory; as he put it today on TBPN, “the only two things I really care about in my life is [are] working on something that I find interesting and getting the work seen by people.” Yet thus far, he and Cluely haven’t found glory, they’ve cultivated fame. Fame is being known, while glory is being known for great achievements.
As I noted earlier this week, for Cluely, such fame’s de facto function has been as a highly successful capital raising tool, not as a sales platform. Despite early revenue generation, they still lack an insanely great product. To that end, if they remain focused on fame and distribution, I find it unlikely they will succeed. Conversely, if they have pioneered leveraging fame as a tool for capital raising with the explicit end goal of product development, that’s a different story.
It seems a16z’s thesis is exactly within the latter bound. As a16z’s Bryan Kim argued today on TBPN:
“The calculated risk here is that Roy can convert this awareness into people clamoring to work at the company that are highly high and exceptional—great people to build products—and then use that to continue to iterate on innovation on the product format that is already amazing. So that’s sort of the bet if you will.”
However, culture eats strategy for breakfast. Despite later commitments to product development, Roy demonstrated this when declared today “whatever you thought—the viral content, you thought this was cool—bro we’re doing 10x this!” I still remain skeptical of the extent to which it can he can shift the culture to focusing on products. The product development we see in the next six months should offer an answer.
YC’s AI Startup School (“SUS”) may have been the peak of this, or worse, the beginning.
“Ellison had a way of talking about Oracle's products that left people with the impression that it could do certain things that it couldn't really do. Everyone at the company accepted that.”
I specifically say consumer software here and not B2C; I think fame can be highly effective for several consumer verticals, namely, CPG.