How Cameo Became a Star
The company, which connects celebrities with fans via paid videos, just reached unicorn status. Cameo is a great example of how a slow-burn strategy can catch fire and scorch unsuspecting competitors.
Chicago is all abuzz about the new unicorn in town. Cameo, a 4-year-old startup that allows users to buy short, video shout-outs from celebrities, just completed a new $100 million round of financing at a valuation of more than a billion dollars. The list of new strategic and growth investors led by e.ventures reads like a tech Who's Who (Amazon, Google, SoftBank, etc.) and the newbies join an existing A-list VC roster headed by Kleiner Perkins, and Lightspeed Venture Partners.
The irony is that when the business was started a few years ago as two young guys trying to talk B- and C-list has-beens and never-wases (plus some new and old jocks) into making a few bucks recording videos on their phones for complete strangers, pretty much everyone thought it was a joke. Who would agree to do it? Who would care about the people doing it? And, of course, who would pay for it? While maybe everyone has their 15 minutes of fame, Cameo was chasing people who had burnt out long ago or missed their moment completely.
What no one realized in the beginning (when the entire Cameo team shared a modest glass-walled office at 1871, Chicago's premiere tech incubator) is that this is a near-perfect example of how new competitors can enter a market at the very bottom - and get ignored or ridiculed by all the existing players -- while slowly and steadily improving their offerings. Cameo moved continually upstream, grew its presence and share, and is now poised to pounce.
This is exactly what China did to sectors of the American steel industry. They started by producing and delivering cheap, dirty and low-grade rebar (those rusty stakes you see sticking out of concrete at every construction site with the little orange caps), which no one else in the U. S. wanted to produce because of the low margins and associated workplace pollution problems. And then, in just over a decade, the new entrants developed clean mini-mills and came to be a significant player in the production of most specialty steel in this country. Change China to Japan and you've got the same basic story with film and copying machines. If this process sounds somewhat familiar, it's the core concept behind Clay Christensen's theory of disruptive innovation. Start small and moderately priced in potentially large and under-appreciated markets, or in markets that were largely monopolized and taken for granted. Serve your customers most basic needs, innovate and iterate constantly, and move so quickly that the incumbents can't keep up with the pace.
Cameo never worried about the quality of the videos on their folks' phones -- although the quality and smarts of those phones exploded, which didn't hurt. Smooth, polished and slick was out. In fact, the more informal, the more ad hoc, the goofier some of the early offerings were, the more authentic and real they seemed to the end users in an age of fake, plastic and manufactured everything. In a way, everyone was in on the joke and the hokier the performance, the bigger the bang.
These days, some 1,300,000 videos later, there are more than 40,000 celebs and other personalities of all sizes, shapes, ages and histories competing every day on the Cameo site to make videos and make someone's occasion instantly memorable, for a fee. The talent sets the price for their own videos and Cameo takes a cut of each transaction. Last year's revenues look to have been around $100 million.
And, as sad as it is to say, the COVID-19 pandemic couldn't have come at a better time for Cameo since everyone who was anyone was stuck at home along with the rest of the world looking for something to do in the way of work. At the same time, digital gifts are safe and easy to deliver. As the business and the transaction volumes took off, it turned out that these celebs could actually make some real money in their spare time. The company says that more than 150 of their best "creators" earned more than $100,000 each last year.
All good, you say, but who's really being disrupted? That's what the world doesn't really know yet about Cameo, even though Steven Galanis, the CEO, talks about it all the time. He says that Cameo isn't really about the videos -- those are mini-Trojan horses for the real score. It's about building a two-way marketplace between celebrities and their fans where just about anything - any task, any request - can be accommodated and bought or sold.
And who is really being disrupted and about to be blown up? Some of the worst people in the world -- talent agents, music label heads and managers. As Hunter Thompson used to say: "The music business is a cruel and shallow money trench, a long plastic hallway where thieves and pimps run free, and good men die like dogs. There's also a negative side."
Once you (and millions of others) can use Cameo's channels to ask Snoop Dogg to do whatever, it won't take him too long to wonder why he needs any intermediary to take care of business. He's already killing it on Cameo, and now non-fungible tokens, NFTs, provide another whole channel for musicians and others to directly connect with fans. Snoop recently observed: "There is no platform or middleman filtering my message anymore." The fat cats in the entertainment business may not know it yet, but their days are numbered. Every day, it seems, the world turns upside down on someone who thought they were sitting on top of it.
Cameo is coming for all of them. The one thing we know for sure in the startup world is that the wolf climbing the hill is always hungrier than the wolf on top of the hill.