Why We Invested In Cluely

0:00I have a saying where momentum is a mode today in the sort of an era of AI applications. And when I say momentum is a mode, I don't mean just distribution. I also mean product iteration. And so the calculated risk here is that Roy can convert this awareness into people clamoring to work at the company that are highly high in exceptional, great people to build products and then use that to continue to iterate on innovation on the product or not that it is already amazing. Yesterday, A16Z partner Brian Kim joined TVPN with host John and Jordy. The discussion centers on Clulee, an AI product that has generated significant attention online.

0:39Brian shares his perspective on the decision to invest, how he evaluates early traction and distribution, and what he looks for when backing founders with unconventional go -to -market strategies. Let's get into it. As a reminder, the content here is for informational purposes only. Should not be taken as legal business, tax, or investment advice, or be used to evaluate any investment or security and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see A16Z .com forward slash disclosures.

1:20Brian, welcome to the studio. How you doing? Good to meet you. You're good to meet you. Great to be here. Thanks, John. Thanks, Rodi. Your notifications must be crazy right now. Cluelie, you guys decided, hey, Friday, let's just throw it out. Take it all the time. That's right. Nobody's crazy to launch. Everyone's going to go in and go in on a weekend. Yeah, there's no other injuries and deals that are really taking up in mind share right now. This is the one. Yeah, you guys, the thinking machines was leaking to the FD and of course, Cluelie's just going to suck all the attention out of you. or for sure this is the one.

1:54Anyways, we got your launch post here that we read briefly earlier on the show, but why don't you break down background on you and then let's break down the deal while you invest it. And then of course, we're gonna have Roy on in just 10 minutes. Fantastic. Background me, been at A16D for four or five years. Look at a lot of AI applications. You met a bunch of my colleagues here and had them already invest in 11 labs, function health of the world. And prior to this was a, Well, that's not as early employee and with the CFO. We've been in LA. Yeah, are you in LA now? I'm in New York right now. Okay.

2:31My heart is in LA. Okay. Yeah, we got to get you back. LA's come up. It was too nice to live, you know? All right. So deal rational anatomy of deal. Or as you said, the anatomy breaks down. I think it really, really breaks down to a couple things. But really three points. One is, you know, distribution. It's really, really hard to get distribution to you say. And to get it repeatedly, there's a little bit of a dark art. And so I think I'll really have that in abundance. So one, got the distribution. We invest for strengths of strengths, as you know, not lack of weakness. And so that's really exciting for us.

3:07Second, I love the product. You know, I grew up on Dragon Ball Z. And I always wanted that one of those scouts that tells you how strong is your already, how strong is John, like you think the thing goes up, right? and that's essentially what it is on your rep browser, right? Yeah. Talking to people, you just show quick command enter, and it just gives you all the things you need to know while reading it and looking into your eyes. I think that's special. I think that sort of is right for a lot of the use cases, whether it's consumer or enterprise. So I love the product. So that's one thing I'll call out today.

3:40We've had our intern over on the intern cam testing, testing the products all day long. And I've been impressed. Yeah. I'm impressed. He's there. Tyler, give us here we go. How are you like in so far? Yeah, it's been really good. I mean, it's very fast. The answers are really good. I think it's like a great product. Well, that's amazing. At a time, why did you put in I would say nine. It's our version of kind of like the the the office in a box. What are the colors that I saw? Yeah, a lot of people have like these toll booths. Yeah, yeah, yeah, yeah, phone booth style. I think the more that I can have a phone is actually live in the pod.

4:16And our version of a pod is a Maybok. Yeah, it's very perfectly. It's perfectly soundproof. So when we don't want to hear him, he just rolls at the window. He just rolls at the window. He's good, but he's got a desk in there. He's got a comfortable set up. A phenomenal, phenomenal massage chair. A good, good, ergonomics. Yes. Thank you. Thank you, Tyler. Yeah, so that was so. So we've, we've had a Roy on the show a couple of times we've covered some of the various stunts and we got some pushback. one of the times we had him on because we hadn't used the product and somebody was calling us out.

4:49And now as a company, we're paid subscribers of Clueley. We're customers. You can throw the Tbpn logo on the site. I've been impressed. We were kind of firing back questions using it more in that interview functionality and the answers were very good guesstimates of somebody that had generalize knowledge on a topic being able to answer quickly. And he actually let her question on it answered it answered the 747 question better than my chat GPT 40 direct answer. Question. Very bogged. It did. It did. Leigh bogged. Yeah. Oh three. Yeah. Yeah. Whatever the fight. Whatever. I wasn't with three. It was the only one goes three.

5:27Love it as well. I guess a lot of the last. I just had last night. It's you know, it's a you know, revenue conversion. A lot of people think, oh, it's just hype and what's happening is that all distribution, all the stunts, the truth is that he is actually converting that to revenue, whether it's consumer or enterprise. So that to me is sort of the, I guess the serious step underlies to create these stunts that people see outside and that combination works for me. I'm excited for it. And you know, let's go. Let's go. Let's go back to the first one. Roy's clearly great at distribution, breaking through, getting attention.

6:06It feels like earned media does have a cap versus paid media or brand marketing or some of the other flywheels, referral programs or some viral mechanics. It doesn't have a cap, Johnny. He's gonna be in front of Congress using clearly in some spectacles. Well, that's a good question. Cheating when he's driving in front of Congress, for any trust. Do you think it has a cap or or or and because you could one one scenario is is this is his this is not this is not this is not his permanent go to market motion. It's it's merely the beach head. It's it's the way to break through get attention higher the first 50 interns, but the next thousand interns will come through recruiters and kind of standard practice and he'll be on a more traditional podcast circuit when he has news, but we won't be hearing from him every single day.

6:56The other is that maybe we're in a new era and he actually can and the company can go viral every single day and you're seeing kind of the Mr. Beast playbook in reverse instead of Mr. Beast going viral every day and then launching a snack brand the other way around. So he's built a company and then becomes famous on the back of that company. Which one of those feels right to you? Yeah, I think maybe I'll just comment one. Mr. Beast follows Roy. So that's fun. Fun fact one. Fun fact too. I think from a media and audience perspective, John and Jordi, I think of it as like a bunch of oceans. There's no one ocean.

7:37There is Indian Pacific Atlantic and that's Twitter, Facebook properties as well as like more organic and all of these pools of water are very, very deep. And in terms of general population who I lovingly call our consumers, I still think it's So early, the only consumer AI product people are using, I'd really chat GPT. And for them to actually learn about products like this and use it, I think the sort of like oceans way deeper than we imagine. And we're just scratching the surface today. Talk about calculated risk. This feels, you know, this is a calculated bet. You guys invested 15 million in the company.

8:20He's clearly talented on the product side, clearly talented on the attention side. he's charismatic, he's fun to talk to, he's well spoken, all these things. So there's a lot of reasons to love it. And then the pushback and other VCs that maybe didn't do the deal would say, Roy's like a wild card. Like do you think that more investors need to be comfortable with like a very potential real risk and maybe the average VCs has just gotten a little soft? Good things. I think look, like if you think of the history of large general population products, you see a lot of them actually being pretty risky early on, odd or not, for Facebook.

9:01Where does Snap begin? What was, you know, Reddit initially, and sort of thinking about that, I think there's the beginning of a lot of the consumer products and products that are used by many people, have a funny beginning sometimes. And I think so one, calculator, wrist site, we're comfortable with that. And I think second thing is, when I, you know, I was saying where momentum is a mode today in this sort of an era of AI applications. And when I say momentum is a mode, I don't mean just distribution. I also mean product iteration. And so the calculated risk here is that Roy can convert this awareness into people clamoring to work at the company that are highly high in exceptional great people to build products and then use that to continue to iterate on innovation on the product or method is already amazing.

9:49So that's sort of the bet, if you will. And when those two come together, I think we'll be surprised. How do you think about restrictions or dynamics from the major big tech companies? Because you mentioned that there's a consumer angle here, but when I see the product, I see it as a desktop app, and many consumer interactions happen on the phone. And so Roy was fantastic at creating a viral moment around the idea of like using Clule on a first date. And yet, you're not going to have a first date over a Zoom meeting on your MacBook Pro. Maybe, maybe, maybe, maybe, maybe, maybe, but, but, but, people do talk to each other on the phone and on FaceTime, but it's much harder to plug in and do screen recording and do picture and picture and all of that.

10:44So it feels like there needs to be some sort of transition point if you're going to go broader to killer use cases for consumer. But at the same time, you're going to bump up against a ton of pushback from the platforms who just say, we don't want to give you access to that API. We don't want you to screen record for privacy reasons good or bad. So I don't disagree. We are techno optimists and I would believe that there will be another innovation that actually allows the likes of Blueleet to live and be on the present and everyday interaction. That said, AI is like a digital god we created and we trapped it behind a little chat box.

11:22So it is natural to me that it should live on a thing that you actually work and interact with the most and we're starting with computers today because that's where the power is. Like that's actually, digital god is not godly enough on the little little devices today. So we put it in a little larger box and the little boxes will get better and we're excited for that future. Awesome. Well I'm excited for you guys. Congratulations on the deal and we got to get Roy in here. We should pull up the launch video as well but thank you for joining. Thanks for having me. Thanks Ryan. Thank you for being bold and making real bad.

11:56Probably I have to fight it out with American dynamism team because as we know they're working on hardware, they're reworking on reindustrialization, they're doing everything over there. Thank you so much for stopping by. We'll talk to you soon. Cheers. Bye. Thanks for listening to the A16Z podcast. If you enjoyed the episode, let us know by leaving a review at ratethispodcast .com slash A16Z. We've got more great conversations coming your way. See you next time.