It’s because the hot idea in business right now is rental models for everything.
If your business plan doesn’t have a way to lock customers in and force them to keep paying forever, then no investor is going to look at it.
Software is subscription, infrastructure is subscription. Hell, your own data is probably subscription based these days. Buy a car? Bet your ass it has at least 1 subscription service in it.
One of the driving forces behind this phenomena is that business types value having that reoccurring revenue on the books more than “normal” revenue. If you have two companies with identical revenue but one of them gets it from customers locked in on a subscription, that company will be valued significantly higher. If you’re an exec or a big investor who owns a lot of stock in a company then you’re effectively incentivized to push the company towards that subscription based reoccurring revenue model because it will boost the stock price and make you richer.
I was talking about this with my friend the other day. I was looking for car insurance right. I went to Geico and I was just about ready to lock in to a plan for 1000$. I had a question I needed answered so I went to support. What I got was a worthless chatbot that ended up costing Geico my business. I was so displeased I ended up going to progressive.
But that begs the question: do Geico executives make more money off the increased stock valuation that comes from implementing a chatbot despite losing my real, cash business?
It’s because the hot idea in business right now is rental models for everything.
If your business plan doesn’t have a way to lock customers in and force them to keep paying forever, then no investor is going to look at it.
Software is subscription, infrastructure is subscription. Hell, your own data is probably subscription based these days. Buy a car? Bet your ass it has at least 1 subscription service in it.
One of the driving forces behind this phenomena is that business types value having that reoccurring revenue on the books more than “normal” revenue. If you have two companies with identical revenue but one of them gets it from customers locked in on a subscription, that company will be valued significantly higher. If you’re an exec or a big investor who owns a lot of stock in a company then you’re effectively incentivized to push the company towards that subscription based reoccurring revenue model because it will boost the stock price and make you richer.
I was talking about this with my friend the other day. I was looking for car insurance right. I went to Geico and I was just about ready to lock in to a plan for 1000$. I had a question I needed answered so I went to support. What I got was a worthless chatbot that ended up costing Geico my business. I was so displeased I ended up going to progressive.
But that begs the question: do Geico executives make more money off the increased stock valuation that comes from implementing a chatbot despite losing my real, cash business?