Details on how to speak about money (or promised money) your startup has received from customers.
Appreciate Garry Tan posting this over on X today in what feels like a small acquiescence to the moment of hype AI startups are in.
The metrics below are mostly useful for AI software startups of various flavors, though I’m sure hardware and other founders can find them useful.
List of stuff that is not revenue:
- Non-binding letters of intent, unpaid pilots, design partnerships. Calling this revenue is lying and not cool.
List of stuff that is revenue, but not recurring:
- marketplace GMV (your revenue is the cut you make, not the total dollars flowing through your marketplace) - contracted revenue (cARR) from paid pilots that haven’t paid yet. Honestly not even sure this counts as revenue, be specific. - Usage or transactional revenue. No guarantee this is happening next month!
List of stuff that is ARR/MRR (Annual Recurring Revenue):
- Dollars actually invoiced and paid every month or every year.
It can feel so easy to change your words juuuust a little to pant a better picture. And I’m sure you’ll have lots of stories of founders who did so and got away with it (or more pointedly, raised the round on it).
Just don’t. Not worth it. 🙏
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