Who Will Make It Rain?

Cluely, Rainmaker, and the question of distribution

Two startups—Cluely & Rainmaker—have dominated the timeline recently. For those less chronically online: Roy Lee and Augustus Doricko respectively leverage their charisma and persona as a key lever of their brand’s distribution. Each presents as fearless and enterprising, which has invited wry comparisons to Valley lore. With TBPN providing auxiliary support, these firms seem poised to take off.

It brings in the age old question of distribution versus product. In Cluely’s case, its product consists (in the simplest terms) of wrapping a foundation model with workflow augmentation software (B2B/C AI SaaS). In Rainmaker’s case, from my understanding, they’re providing B2B/G cloud seeding services, akin to what the NCM does in Dubai. Neither are doing anything revolutionary per se, a fact openly acknowledged by the founders. IIRC, Lee called distribution the only moat, and Doricko is frequently placing himself in a position where he must remind lawmakers that his technology is tried and tested.

I don’t intend to over-intellectualize what in some sense could be construed as young founders having fun on the internet. But their explicit ambition invites questions. To that end, if these founders implicitly admit to building a generic technology, why the lack of focus on product? Sure, you could say they are also focusing on product. But every second that Lee spends at the Cluely YC AI Startup School afterparty is one that he spends not building a better product. Same goes for Doricko’s airtime. Further, one could argue that the narrow audience they reach with their five and six figure follower counts on X has limited use in the grand scheme of mass market customer acquisition.

Conventional wisdom (à la Altman, Musk, Jobs, etc.) posits that building a great product solves the need for distribution. As Buchheit wrote, “if your product is Great, it doesn’t need to be Good.” Obviously, startups are built on unconventional takes. But running awry of warnings from these titans strikes the discerning viewer as a questionable choice. Nonetheless, Cluely and Rainmaker have thus far experienced absolutely meteoric success. Meteoric success that is, in terms of raising.

Indeed, Cluely announced a $5.3M seed round in May, led by Susa and Abstract. Rainmaker announced a sizable $25M Series A led by Lowercarbon during the same period. Roy’s now been rumored to be raising a $12M Series A at $120M post led by a16z, though some say he’s holding out (for the three commas). These young founders have captured an audience, one not composed of end users, but rather, venture capitalists.

It is this question of audience that I believe is so critical; Lee and Doricko publicly treat their internet presence as a distribution network. Practically, it operates more effectively as a capital allocation channel. Their actual end-users—a SaaS sales rep in Boston or a municipality in the Central Valley—will seldom be found watching TBPN or scrolling on X. Whether they know it or not (I think they know it), they are advertising their product and vision to VCs, who are evidently buying it.

Is this just conjecture? Certainly! But as Lee described it in the midst of his rumored raise, “im much more dilution sensitive than i am cash sensitive.” In other words, his audience has made him cash insensitive. Perhaps more telling, as he put it yesterday, “distribution is a solved problem for us.”¹ Lee is smart enough to know that distribution is a never-ending battle, even if you enlisted some chronically online zoomers in your fight. What might be solved, however, is his short term capital needs. The question of whether such attention and the accompanying capital can be used to convert good products to great remains to be seen. While past performance is no indicator of future performance, I’m optimistic.

1. With absolutely no basis beyond what’s presented herein, I take this as a tacit indicator that he just finished raising a bridge round or Series A.