I wasted my youth in tech. And if you’re lucky, you might do the same. The world moves in waves, and our industry moves in slogans, in dogmas, in thought-stopping clichés. Today, one of those slogans holds that, since AI has driven down the cost of producing software, there’s no longer any possible technical moat (except at the very highest levels) – so “distribution is the moat.” That is, distribution is the structural competitive advantage that protects a company’s margins and market share, distribution is the thing that can’t be copied or eroded by competitors, distribution is the unfair advantage.
Out of sheer skeptical vocation, and because I make a living off this and don’t like being wrong, I ask myself:
- Is this true?
- What is distribution?
And bound by logic, though not by linearity, I find myself forced to start at the end.
What is distribution?
The term marketing carries a terrible reputation. And so neologisms flourish, novel ways of saying marketing without saying marketing. “Distribution” is marketing. “I distribute my product through SEO” means “potential customers discover me because my marketing department does SEO.” Distribution is marketing. “Distribution is the moat” can be translated as “everything is so commoditized that the companies with the best marketing are going to win.” Of course, since marketing has such a lousy reputation, this translation sounds trashy, sounds scammy – how can marketing be the competitive advantage? Shouldn’t competitive advantages be born from the product, not from the way it’s promoted? What’s going on here?
The pleasure of cheating
In 2024, a then-Columbia University student named Chungin “Roy” Lee bragged on X about using an AI assistant to cheat on a job interview with Amazon. His offer was rescinded and he was expelled from the university. By April 2025, Lee had raised a $5.3M seed round, with the goal of building a tool to scam people in real time. By June, this not-at-all socially corrosive idea had received an extra $15M in backing in a Series A led by Andreessen Horowitz.
As my esteemed Sam Kriss explains, Cluely (the product) doesn’t work. After its most recent iteration, it survives as an AI notetaker, a sort of Granola with elusive competitive advantages.
While the Cluely product doesn’t work, the Cluely brand is a success. On TikTok, Cluely boasts 4.1M likes. On Instagram, half a million followers. Cluely isn’t so much a piece of software as a short-form content studio about tech and entrepreneurship, building loyalty through irreverence – like a Good Work for people with a blown-out attention span.
Cluely is a new media company. And these days, it’s experimenting with a new business model: leveraging its large, young audience by producing a range of apps. Cluely has a looksmaxxing app, an app for generating images and videos with AI, and a language-learning app.
Cluely has the distribution channel, the marketing channel – all it’s missing is the product. Monetizing a new media company is hard. Selling products is a viable strategy.
Cluely solved its top of funnel, its “distribution,” in an entertaining way. The lesson: the best ideas are jokes, the best way to promote something is to have fun doing it. Now it will run into much thornier problems: monetization and retention.
Let’s go back to the beginning, back to my first question, still unresolved: is distribution the moat? Does whoever has the best marketing win? True to my habits, I’ll answer with another question: what does winning even mean?
By Aaron Marco Arias
Frequently asked questions
What does “distribution is the moat” mean?
That with AI driving down the cost of producing software, technical advantage is no longer enough to defend a business. What would protect a company’s margins and market share is its ability to reach people – something competitors can’t easily copy or erode.
What is a moat?
It’s a company’s structural competitive advantage, the thing that protects its margins and market share against competitors. It’s the “moat” around the castle, or, without the medieval metaphors, the unfair advantage.
What is distribution in a startup?
It’s marketing with a better reputation. “I distribute my product through SEO” means “people discover me through SEO.” The neologism exists because the word marketing drags around a reputation for tricks and scams.
Is solving distribution enough to win?
Not necessarily. Cluely solved its top of funnel in an entertaining way, but it still faces thornier problems: monetization and retention. Attracting attention and building a business are different problems, and monetizing a new media company is hard.
So, is distribution the moat?
It depends on what we mean by winning. If winning means having attention, maybe so. If it means having a business that retains and monetizes, the answer gets a lot more complicated.