33 mins of AI LAW NEWS for the past TWO WEEKS.
[ *** SUBSTACK TRANSCRIBED AND IT RUNS AT 2X SPEED AND I CAN’T CHANGE IT, SO SUBSTACK HAS SAVED YOU 10 MINUTES PARDON THE SQUIRREL VOICE! *** ]
Here is Purple Law with Harvey + Legora [is it “Hegora” or “Larvey”?] pricing and pricing drop off. LINK
From the report, here some pricing breakouts, I should say GROK GAVE ME THE LOW LOW DISCOUNTED PRICING I TALK ABOUT IN THIS — *** ANOTHER DATA POINT SHOWING LEGORA PUBLIC PULL BACK ON RATES!
Here is my favorite tweet of this week
Adding a MAGNIFICENT TWEET just seen after this by genius Spellbook CEO Scott Stevenson on how enterprise AI companies can jack with their valuations via revenue statements
https://x.com/scottastevenson?s=21
“It’s time to expose a huge scam in AI startups: Contracted ARR
The reason many AI startups are crushing revenue records is because they are using a dishonest metric
The biggest funds in the world are supporting this and misleading journalists for PR coverage.
The setup: Company signs 3-year enterprise deals. Year 1 is discounted (say $1M), Year 2 steps up ($2M), Year 3 is full price ($3M).
They report $3M as “ARR” — even though they’re only collecting $1M right now.
The worst part: The customer has an opt-out option at 12 months! It’s not actually a 3 year contract.
In the chart below, by Q5 the company is trumpeting ~$100M “ARR” to press, while actual cash-generating, in-effect ARR is ~$35M. That’s ~3x inflation.
On top of this, enterprise AI companies are bundling full-time “forward deployed engineers” into deals massively reducing margins, sometimes producing Year 1 negative margins.
At some point customers are going to start triggering their opt-out clauses or aggressively negotiating down Year 3 pricing.”
And a wave of enterprise AI companies may collapse.
