""People are willing to experiment because they don't want to be left behind in AI," he said. "That's good and bad. It's great for founders, they get to finance some of their R&D with revenue. It's bad because it's pilot revenue. It may go away," he added. "A lot of founders know it's a joke, but they don't have any problems just taking whatever month's revenue is, that's all pilot revenue, and multiplying by 12," he said."
""Retention is so important," Lin said. "I prefer to have slower growth quality revenue than fast growth non-quality revenue," he added. "You have to look at the underlying metrics," he said, adding that some of the best companies took time to build before they hit significant revenue growth. "The measurement should be about the velocity of the company, not just revenue growth.""
A surge of experimental AI revenue from short-term deals and pilot programs is inflating some startup financials but may not be sustainable. Some startups annualize pilot revenue by multiplying a single month's pilot income by twelve, creating misleading recurring revenue figures. Investors should evaluate revenue quality, focusing on customer retention after pilots and underlying metrics rather than headline growth. Company velocity and durable customer engagement provide better signals of traction than temporary pilot-driven income. Slower growth with high-quality, repeatable revenue is preferable to rapid growth driven by transient experimental revenue.
Read at Business Insider
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