TLDR Tech / Founders
It's time to expose a huge scam in AI startups: Contracted ARR
Many AI startups are crushing revenue records because they are using a dishonest metric. Companies are reporting inflated ARR due to long-term enterprise deals they can report now but also opt out of after 12 months. On top of this, some companies are bundling full-time forward-deployed engineers into deals that massively reduce margins and sometimes produce negative margins. A wave of enterprise AI companies will collapse if customers start triggering their opt-out clauses or aggressively negotiate down long-term pricing.
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