Bill Kimberlin

Fine, I'll say the thing that no-one is saying... There's a bunch of AI companies with $1-10M "ARR" raising big VC money on what I'll call "curiosity revenue" - not real sustainable ARR. Basically, what's happening right now is a lot of people have high willingness to try AI products. They'll sign up for a free trial, maybe even convert to paid for a couple months out of curiosity. This creates a temporary revenue spike that looks like product-market fit but isn't. They call it ARR, but it's more like "hey I'll try this product revenue". Of course there are companies like Replit, Cursor or Bolt that are building real products solving actual workflow problems. These companies have genuine retention and expanding usage. And hey, companies like Bolt had been building for like 6 years prior to adding any AI features. Replit has a similar story I think. But many AI startups are riding a wave of novelty and FOMO, not solving real problems. They're showing investors nice growth curves that will flatten in 6-12 months when customers realize the product isn't actually improving their work. A slick demo reel + stripe payment +novel feature might be good enough to try but may not be enough to be a true ARR type of customer. And then we will see a bunch of zombie AI companies. The people who will get hurt will be the employees who think their stock is worth millions but then the founders go and try to raise more money but try raising money when revenue is down 65%. The real tell is retention. Are people still using the product 6 months in? Are they using it more over time? Or did they try it a few times, got the "wow" moment, and then slowly stopped? By the way, even companies with true PMF are at risk. The AI landscape shifts so rapidly that your PMF can be temporary. Example: we're seeing people switch from ChatGPT Pro at $200/month to Grok/Perplexity Deep Research for free with barely a second thought. Unlike previous tech cycles (mobile, web), where advantages could last years, AI competitive moats are filling in weekly. We're probably 18 months away before we start seeing a bunch of zombie companies. The AI companies that survive will be the ones that focused on solving real problems, iterating as the market changes, building true community and not just demo-ing cool sizzle reel after sizzle reel. Am I wrong?